Ascendas Reit units ease 2.2% on hefty turnover

Singapore

ASCENDAS Real Estate Investment Trust (Reit) fell on Friday, with the business space and industrial property Reit's unit price closing S$0.06 or 2.2 per cent lower at S$2.63.

The counter was also among the most heavily traded of the day on turnover of some 30.3 million units.

The dip came on the back of news that the Reit manager had priced a private placement of 178 million new units at S$2.54 apiece to raise gross proceeds of around S$452.1 million.

In a note before market opened, OCBC Investment Research analyst Andy Wong said that the brokerage expected to "see some selling pressure in Ascendas Reit's units this morning following the placement announcement".

The price of S$2.54 represented a discount of 6.09 per cent to the volume-weighted average price of S$2.7047 on Sept 6, 2018, when the placement agreement was signed.

Maybank Kim Eng analyst Chua Su Tye told BT: "The placement deal was 2.2 times subscribed at a 6 per cent discount, suggesting strong demand for the units."

Based on Friday's closing price, Ascendas Reit units were at a 3.5 per cent premium on the price of the placement units. The new units will begin trading on Sept 18.

Ascendas Reit said it will use S$250 million, or 55.3 per cent of gross proceeds, to partially fund the acquisition of a second UK logistics portfolio.

Some S$109 million, or 24.1 per cent of gross proceeds, will fund the development of a build-to-suit facility in Singapore.

The remainder will be split between funding debt repayment and future acquisitions, and paying fees and expenses incurred in connection with the private placement.

"We view the placement positively, as the funding aims to support a clear transaction pipeline," Mr Chua commented.

Pending more details from the proposed acquisitions and build-to-suit project, Mr Wong maintained OCBC Investment Research's "hold" rating on the unit with a fair value of S$2.71. Meanwhile, CGS-CIMB's Lock Mun Yee is maintaining his "add" call, with a target price of S$2.89.

Ascendas Reit remains Maybank Kim Eng's top industrial sector pick "for its scale, trading liquidity, and more than 6 per cent dividend yield", Mr Chua said.

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