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SPH Reit to raise at least S$161.5m through private placement

Singapore

SPH Reit has launched a private placement to raise at least S$161.5 million to partially fund its proposed A$670 million (S$627.9 million) acquisition of a 50-per-cent stake in a shopping centre in South Australia.

The private placement will see the listing of 156.6 million new units at an issue price of between S$1.031 and S$1.075 per unit, the manager said on Thursday.

The issue price represents a discount of between 3.2 per cent and 7.2 per cent to the volume-weighted average price (VWAP) of S$1.111 of all trades done on Nov 20 - the market day before the placement agreement was signed.

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It also represents a discount of between 2 per cent and 6 per cent to the adjusted VWAP - which subtracts the estimated cumulative distribution of around 1.39 Singapore cents, the midpoint of an estimated range of between 1.37 cents and 1.41 cents per unit.

Out of the S$161.5 million in gross proceeds, around S$159.5 million or 98.7 per cent will be used to partially fund the acquisition. Some S$2 million or 1.3 per cent will be used to pay estimated fees and expenses in connection with the private placement and proposed acquisition. Any balance of gross proceeds will be used for general corporate or working capital purposes.

The new units are expected to be listed on Dec 2 upon in-principle approval from the Singapore Exchange. The new units will also be offered to eligible institutional, accredited and other investors.

SPH Reit, whose sponsor is Singapore Press Holdings, which publishes The Business Times, said two weeks ago that it was planning to buy a 50 per cent stake in Westfield Marion Shopping Centre, a 1.5 million square foot mall in Adelaide. The freehold property has three storeys of retail space, five office floors and 5,270 parking spaces.

The acquisition looks to deepen the Reit's presence in Australia with this entry into the Adelaide market and will add resilience, diversity and quality to its portfolio.

The Reit said the transaction was distribution-per-unit and net-asset-value-per-unit accretive.

The price tag of A$670 million takes into account an independent valuation of 50 per cent stake in Westfield Marion at A$679.5 million.

The manager said at the time that it planned to pay for the deal with a mix of proceeds from the August 2019 issuance of S$300 million of perpetual securities, as well as debt and/or equity fundraising.

A trading halt in the units was called on Thursday morning before the market opened; SPH Reit units closed flat at S$1.11 on Wednesday.