Hot stock: ESR-Logos Reit falls 7.1% post private placement to S$0.325
UNITS of ESR-Logos Reit slipped 7.1 per cent in early trade on Friday (Feb 17), at S$0.325 after the real estate investment trust (Reit) announced the close of a private placement exercise.
As at 9.15 am, the Reit hit a four-month low of S$0.325, down S$0.025 or 7.1 per cent from Wednesday’s closing at S$0.35, before the trust issued a trading halt. The last time the Reit’s units traded near such levels was in October 2022.
It later rose to trade at S$0.33, down S$0.02 or 5.7 per cent with 32.4 million shares transacted as at 10.34 am.
No married deals were recorded in early trade, according to ShareInvestor data.
This comes after the Reit on Friday issued about 454.5 million new units at S$0.33 apiece, which represents an approximately 5.8 per cent discount to the volume-weighted average price (VWAP) of S$0.3502 for all trades on the Singapore Exchange on Feb 15, before trading halted.
At S$0.325, the units of ESR-Logos Reit are also below the theoretical ex-rights price of S$0.349. ESR-Logos Reit unitholders will also be diluted further if a proposed preferential offering goes ahead.
The preferential offering is to be priced at S$0.325. It will need to be approved by unitholders at an extraordinary general meeting.
Trading of the private placement units is expected to start at the opening bell on Feb 27.
ESR-Logos Reit plans to raise S$300 million through the private placement and preferential offering which will raise S$150 million each.
The trust intends to use S$293 million to fund future potential acquisitions and finance redevelopment or asset enhancement initiatives of the Reit’s properties. The remaining S$7 million will be used to pay fees and expenses incurred by the trust over the fundraising exercise.
In a report on Friday, Maybank Securities reduced its target price on ESR-Logos Reit to S$0.45 from S$0.51, after lowering its forecast for the Reit’s FY2023 distributions per unit by 11 per cent due to the expanded share base.
However, the research house maintained its “buy” call on the stock, noting that the dividend yield is “attractive” at 7.7 per cent.
Maybank analyst Li Jialin said that the Reit’s fundamentals remain healthy, with additional income from two portfolios acquired in April 2022 making a full-year contribution in FY2023. She also noted that the Reit completed development of four more assets available for acquisition in Singapore and Japan.
Based on pro forma estimates, the Reit’s net asset value per share will dip to 35.9 cents, while its aggregate leverage will drop to 38 per cent and further to 32.3 per cent.
“We see this as a good opportunity for ESR-Logos Reit to de-risk the balance sheet and to prepare for more actions in FY2023,” said Li.
