ESR-Logos Reit will not redeem its S$150m 4.6% perpetual securities

ESR-LOGOS real estate investment trust ( E-Log ) will not redeem the outstanding securities of its S$150 million, 4.6 per cent perpetual securities, the trust’s manager said on Friday (Sep 30).

Instead, the distribution rate would be reset on Nov 3, its first reset date, to a rate equivalent to the prevailing Swap Offer Rate (SOR), plus the initial rate of 2.6 per cent per annum. The 6-month SOR stood at 3.28 per cent as at Sep 23, going by figures from the Association of Banks in Singapore.

This new distribution rate would be applicable for 5 calendar years from Nov 3.

Given the current interest rate environment and capital market conditions, it is not in E-Log’s interest, from a cost perspective, to issue new perpetual securities to redeem the outstanding securities, the manager said.

It added that although E-Log has “ample committed debt facilities” it can draw from to redeem these securities, doing that will increase leverage and reduce debt headroom available for acquisition opportunities, asset enhancement initiatives, and/or redevelopment opportunities during a market recovery.

The perpetuals were issued in October 2017. Distributions are payable semi-annually in arrear on May 3 and Nov 3 of each year.