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Ascendas Reit launches private placement to raise at least S$450 million

ASCENDAS Reit plans to raise gross proceeds of at least S$450 million through a private placement of 178 million new units at an issue price of between S$2.528 and S$2.606 per unit.

That represents a discount of between 3.65 to 6.53 per cent of the volume weighted average price (VWAP) of S$2.7047 per unit traded on Thursday. The issue price will be determined following a book-building process.

Proceeds of S$250 million will be used to partially fund the acquisition of a second UK logistics portfolio, while S$109 million will partially fund the development of a build-to-suit facility located in Singapore, the real estate investment trust (Reit) manager said on Thursday.

Another S$87.1 million will be used to fund "debt repayment and future acquisitions", it said. Fees and expenses incurred in connection with the private placement are expected to cost S$3.9 million.

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The private placement will increase the total number of units in issue by 6.1 per cent.

To ensure fairness to existing unit holders, the Reit manager is proposing that an advanced distribution of around 7.25 Singapore cents be paid to existing unit holders as an advanced distribution.

If this advanced distribution is subtracted from the earlier VWAP of S$2.7047 per unit, then the issue price of the new placement units represents a smaller discount of 1-3.95 per cent of the adjusted VWAP of S$2.6322 per unit.

The advanced distribution will be paid out from the distributable income accrued by Ascendas Reit up to the day immediately preceding the date of issue of the placement units, which at this point, will be entirely attributable to the existing units.

Thereafter, the next distribution will comprise Ascendas Reit’s distributable income for the period from the day that the new units are issued to Sept 30. Semi-annual distributions will resume thereafter. 

The Reit manager said: "The proposed UK acquisition represents an attractive opportunity to gain further exposure to the growing UK logistics property sector, benefiting from similar characteristics as the first UK logistics portfolio such as attractive spreads to 10-year UK government bond yields, tight supply of logistics properties, increasing rentals over the past five years despite the Brexit referendum and a large and rapidly growing e-commerce and freight market."

The placement is fully underwritten by DBS and JP Morgan, which are the joint lead managers and underwriters. The new units are expected to be listed on Sept 18.

The counter fell five Singapore cents or 1.83 per cent on Thursday to close at S$2.69.