Ascendas REIT launches private placement to raise at least S$450 million

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Ascendas REIT has launched a proposed private placement of 178.0 million new units to institutional and other investors to raise at least S$450 million, with part of the proceeds earmarked to fund the acquisition of a second portfolio of U.K. logistics properties, the REIT’s manager said on Thursday.

The issue price of the new units will be between S$2.528 and S$2.606, representing a discount of between 3.65 percent and 6.53 percent to the volume weighted average price of S$2.7047 per unit for trades on Thursday, it said in a filing to SGX on Thursday after the market close.

The pricing will be determined after a book-building exercise, the filing said.

Second U.K. logistics portfolio

Around S$250 million of the proceeds, or around 55.5 percent, is earmarked to partially fund the acquisition of a second U.K. logistics portfolio, it said. The REIT manager is currently conducting due diligence on the properties and may or may not proceed with the acquisition, it said.

That would be the second U.K. logistics portfolio after Ascendas REIT said in late July that it would buy 12 U.K. logistics properties for 207.27 million pounds to expand its geographical footprint beyond Asia and Australia; the transaction was completed in mid-August.

“The manager believes that the proposed U.K. acquisition represents an attractive opportunity to gain further exposure to the growing U.K. logistics property sector, benefiting from similar characteristics as the first U.K. logistics portfolio such as attractive spreads to 10-year U.K. government bond yields, tight supply of logistics properties, increasing rentals over the past five years despite the Brexit referendum and a large and rapidly growing e-commerce and freight market,” the REIT manager, Ascendas Funds Management (S), said in the statement.

“The manager believes that this will enhance distributable income to unitholders,” it said.

Around S$109 million of the proceeds would be earmarked to partially fund the development of a build-to-suit facility in Singapore, subject to the completion of negotiations and satisfactory due diligence, it said.

Reducing leverage

Another around S$87.1 million of the gross proceeds were expected to be used for funding debt repayment and future acquisitions, the REIT manager said.

Approximately S$3.9 million of the proceeds would be to pay Ascendas REIT’s estimated costs for the private placement, it said.

Ascendas REIT’s aggregate leverage increased to 38.0 percent after the completion of the first U.K. logistics portfolio, the divestment of No.41 Changi South Avenue 2 and the acquisition of Cargo Business Park, from 35.7 percent as of 30 June, it said.

After the placement, Ascendas REIT’s leverage is expected to decrease to 33.8 percent, the filing said.

DBS Bank and JPMorgan (S.E.A.), the joint lead managers and underwriters, have agreed to procure subscriptions for or place out the new units, or to subscribe and pay for them, with the placement fully underwritten, the filing said.

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