S-Reits pursuing growth as Iran war escalates risk poorly timed equity raising exercises

[SINGAPORE] Market watchers who had been closely monitoring Lendlease Global Commercial Reit’s (L-Reit’s) preferential offering of new units might not have been all that surprised by the significant undersubscription rate that was announced last week.

The S$196.6 million equity raising exercise to fund the purchase of a 30 per cent stake in PLQ Mall was announced on Feb 25 – only three days before the US and Israel launched military strikes on Iran, which triggered a broad sell-off in Singapore-listed real estate investment trusts (S-Reits).

In the wake of the turmoil, L-Reit’s market price struggled to stay above the preferential offer price of S$0.558 per unit. The 119-for-1,000 offer of nearly 352.4 million new units ended up receiving valid acceptances for only 186.9 million units, and excess applications for 32.2 million units.