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Hot stock: Ascendas Reit units down 2.6% after manager prices S$452m placement at S$2.54 per unit

ASCENDAS Real Estate Investment Trust (Reit) units have slipped during Friday's early trading session with the business space and industrial property Reit's unit price down S$0.07 or 2.6 per cent at S$2.62 as at 2.20pm.

It was also among the Singapore bourse's most heavily traded stocks on the day with some 20 million units changing hands.

The dip comes on the back of the Reit manager pricing on Thursday a private placement of 178 million new units at S$2.54 per new unit for gross proceeds of around S$452.1 million. 

In a note, 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".

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The price per unit at S$2.54 represents a discount of 6.09 per cent to the volume-weighted average price of S$2.7047 per share for the trading day 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."

Ascendas Reit units currently trade at a 3.2 per cent premium on the price of the placement units, which will begin trading when the markets open on Sept 18.

"We view the placement positively, as funding aims to support a clear transaction pipeline - to acquire another UK logistics portfolio and develop a build-to-suit facility, as well as reaffirming its diversification growth momentum into Europe," Mr Chua commented.

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.

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, 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.