Keppel DC Reit to raise around S$200m through issue of 81m new units

KEPPEL DC Reit's AJBU : AJBU 0% manager announced on Thursday that it has proposed a private placement of 81 million new units in the Reit (real estate investment trust) at an issue price of between S$2.47 and S$2.522 per new unit to raise gross proceeds of between approximately S$200.1 million and S$204.3 million. The proceeds will go towards the acquisition of a data centre in Guangdong, China, as well as to fund future acquisitions and repay debt.

The issue price range represents a 2 to 4 per cent discount off the volume-weighted average price (VWAP) of S$2.5742 per unit for trades in the unit done on Aug 11. It also represents a 1.5 to 3.5 per cent discount to the adjusted VWAP of S$2.56 per unit.

The increase in units also represents an increase of about 5 per cent of the total number of units currently in issue.

The Reit's manager said that about S$67.9 million of the gross proceeds will be used to partially fund the Reit's previously announced proposed acquisition of a data centre at No 5 Bluesea Intelligence Valley in Guangdong, China, together with the facilities and equipment built and installed there.

Another S$128.6 million will be used to fund future acquisitions and repay debt, including debt previously drawn down for investments; the manager noted that the private placement would be an efficient and overall beneficial method of raising funds.

Following the private placement, the Reit's aggregate leverage is expected to decrease to 34.7 per cent from 36.7 per cent, which the manager said would provide it with greater financial capacity to capitalise on future growth opportunities.

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The manager also said that Citigroup Global Markets Singapore, DBS, OCBC and Credit Suisse have been appointed as joint bookrunners and underwriters in relation to the proposed private placement, and that institutional, accredited and other investors will be offered the new units.

It further noted that the issue of new units is within the general mandate given to it during the Reit's annual general meeting held on April 21 this year and no prior approval from unitholders is required.

In line with Keppel DC Reit's policy to distribute its distributable income on a semi-annual basis to unitholders, the manager will further declare an advanced distribution for the period from July 1 to the day before the issue of the new units.

This is to ensure that the distributable income accrued by the Reit before the issue of the new units are only distributed in respect of existing units.

The advanced distribution is estimated to be between 1.401 Singapore cents and 1.441 cents and will be confirmed at a later date.

Keppel DC Reit's manager requested for a trading halt on Thursday, before this announcement was made. The Reit's units last closed at S$2.57 on Wednesday, down S$0.03 or 1.2 per cent.

READ MORE: 

• Brokers' take: DBS, CGS-CIMB upgrade Keppel DC Reit to 'buy' on China expansion
• Data centre Reits navigate growth amid competing forces