SINGAPORE (April 24): Suntec REIT’s manager ARA Trust Management is proposing to issue 84.7 million new units of the REIT at $1.77 to $1.81 per new unit in its bid to raise up to $150 million of gross proceeds, with the possibility of increasing the size of the private placement by up to an additional $50 million.
The price range of the unit placement represents a discount of between 5.8% and 3.7% of the volume weighted average price of $1.879 per unit in the REIT as at the close of Wednesday.
This will translate to net proceeds of about $147.7 million based on the $1.77 minimum issue price, and $149.9 million for the maximum issue price of $1.81 per unit.
It will also increase the number of Suntec REIT units in issue by at least 84.7 million, or a 3.2% increase of the total number of units in issue as at April 24.
About 98.5% of the gross proceeds will be used to finance potential acquisitions of properties in Australia, with the remainder to be allocated for the related fees and expenses for the placement.
In an aftermarket filing on Wednesday, the REIT manager says its potential acquisitions in Australia are expected to be acquired at property yields, which it believes will enhance distributable income to unitholders.
The placement will also provide Suntec REIT with greater financial capacity and competitive advantage to capitalise on potential growth opportunities, with the possibility of increasing the trading liquidity of its units, adds the manager.
The announcement comes after Suntec REIT’s manager this morning posted a 1Q19 DPU of 2.434 cents, unchanged from a year ago.
CEO Chong Kee Hiong said the manager intends to continue improving underlying performance of Suntec REIT’s existing assets while also sourcing for accretive acquisitions to enhance unitholder value.
In Australia, Suntec REIT currently holds a 100% interest in 177 Pacific Highway located in Sydney; a 50% interest in the iconic Southgate Complex, Melbourne; and a 50% interest in Olderfleet, 477 Collins Street, Melbourne.
Units in Suntec REIT closed 3 cents higher at $1.89 on Wednesday.
