CICT launches private placement to raise at least S$200m

CAPITALAND Integrated Commercial Trust's (CICT) manager on Tuesday (Dec 7) proposed a private placement of about 103.6 million new units at an issue price of between S$1.930 and S$1.981 per new unit to raise at least S$200 million in gross proceeds.

In a bourse filing, the manager said that about S$150 million, or 75 per cent, of the proceeds will be used to partially finance the trust's proposed acquisitions of 2 office buildings in Sydney, Australia.

Some S$45.9 million, or 23 per cent, of the proceeds will partially fund potential acquisitions in Singapore and other developed markets, as well as associated costs. The remaining S$4.1 million, or 2 per cent, will be used to pay the estimated transaction-related expenses incurred by the private placement.

The issue price range of between S$1.930 and S$1.981 per new unit represents an estimated discount of between 3.7 per cent and 6.1 per cent to the volume-weighted average price (VWAP) of S$2.0561 per unit for trades done on the preceding market day on Monday (Dec 6) and up to the time the placement agreement was signed on Tuesday.

Based on an adjusted VWAP of S$2.0076 per unit for trades done on Dec 6, the issue price range represents an approximate discount of between 1.3 per cent and 3.9 per cent. The adjusted VWAP subtracts an estimated advanced distribution of about S$0.0485.

The proposed deal is expected to provide accretion in CICT's distribution per unit (DPU) of 1.9 per cent, if the acquisitions were completed on Jan 1, 2021, on a pro forma H1 2021 basis. This value is based on the trust's H1 2021 annualised DPU and assuming the divestment of 50 per cent of its interest in One George Street had been completed on Jan 1, 2021.

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The pro forma aggregate leverage of CICT is expected to be about 40.2 per cent, based on the funding mix of debt, divestment proceeds and equity.

For illustrative purposes, the adjusted net asset value per unit was expected to remain largely unchanged at S$2.01 on a pro forma H1 2021 basis had the acquisitions and the divestment of CICT’s stake in One George Street been completed on Jun 30, 2021. (see Amendment note)

The manager has proposed an advanced distribution for the period from Jul 1 to the day immediately prior to the date on which the new units related to the private placement are issued.

The manager expects to issue and list the new units on Dec 16.

After the advanced distribution, the next distribution will comprise CICT's distributable income starting from the day the new units are issued to Dec 31. Semi-annual distributions will then resume.

JPMorgan and UOB are the joint bookrunners and underwriters for the placement. The private placement will be made to eligible institutional, accredited and other investors.

The manager believes that the private placement will be beneficial to CICT's unitholders as it will help to bring the trust in line with its value creation through portfolio reconstruction. With the reopening of Sydney, unitholders will also benefit from recovery potential.

The trust called for a trading halt on Tuesday, before the market opened. Units of the counter closed at S$2.05, down S$0.01 or 0.5 per cent, on Monday.

Amendment note: An earlier version of this article said that the adjusted net asset value per unit would increase by 1.5 per cent on a pro forma basis. CICT has since issued a clarification stating that the adjusted net asset value per unit is expected to remain largely unchanged.