Elite Commercial Reit launches fully underwritten preferential offering at £0.27 apiece

Elite : MXNU 0% Commercial Real Estate Investment Trust : MXNU 0% (Reit) launched a fully underwritten non-renounceable preferential offering at £0.27 per unit to raise about £28 million (S$47.2 million).

The gross proceeds will be mainly used to repay debt and reduce gearing, strengthening the Reit’s balance sheet, said its manager on Tuesday (Dec 19).

Some 103,354,690 new units will be offered to existing unitholders based on 214 preferential offering units for every 1,000 existing units.

At £0.27 per unit, the issue price represents a discount of 10 per cent to the volume weighted average price of £0.30 on Monday.

The transfer books and register of unitholders will be closed on Dec 27 at 5 pm to determine the provisional allotment of the new units to eligible unitholders.

The manager noted that the preferential offering is “strongly” supported by the Reit’s sponsors – Elite Partners and Sunway RE Capital – as well as its substantial unitholders. “They have irrevocably undertaken to subscribe in full for their respective pro-rata allotments of preferential offering units.”

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It added that Sunway RE Capital further committed to subscribe for excess preferential offering units, the total subscription of which would amount to a maximum of about £16.1 million of the new units.

“Collectively, Elite Commercial Reit’s sponsors and substantial unitholders have undertaken to subscribe for up to a maximum of £24.7 million or 88.6 per cent of the preferential offering units,” said the Reit manager, adding that the remaining amount of new units will be fully underwritten by CGS-CIMB Securities (Singapore) and RHB Bank through its Singapore branch.

Joshua Liaw, chief executive of the Reit manager, highlighted that the fundraising will enhance the Reit’s financial flexibility.

“The funds raised from the preferential offering will allow Elite Commercial Reit to reduce its gearing to 43.5 per cent, creating debt headroom and financial stability during a period of near-term macroeconomic uncertainty.”

He noted that the Reit’s immediate task in the coming year, upon completion of the preferential offering, is to refinance the debt maturing in November 2024. This is to prepare the Reit for growth when the market outlook stablises.

In a business update on Dec 5, the Reit manager reported a gearing ratio of 49.6 per cent as at Dec 1, up 3.8 percentage points from 45.8 per cent as at end-September. The Reit’s adjusted net asset value per unit stood at £0.43, representing a 15.7 per cent drop from £0.51 as at end-September.

Units of Elite Commercial Reit closed Monday flat at £0.30.