ESR-REIT launches equity fundraising to raise up to around S$150 million

Singapore two-dollar bills

ESR-REIT has launched an equity fundraising, including a private placement and a non-renounceable preferential offering, to raise up to around S$150 million, the REIT said in a filing to SGX Monday.

Of the proceeds, around S$44.4 million is expected to be used to fund ESR-REIT’s acquisition costs for a property located at 48 Pandan Road in Singapore, the filing said.

Another S$45.7 million is expected to be used to finance asset enhancements at the 7000 Ang Mo Kio Avenue 5 property in Singapore, and at the UE BizHub EAST property, the REIT said.

Around S$56.8 million is expected to be used to repay existing indebtedness, with around S$3.1 million earmarked for expenses related to the fund-raising, the REIT said.

Private placement

The private placement will be up to around 195 million new units sold to institutional and other investors at S$0.515 to S$0.525 each, to raise at least S$75 million, the filing said. The REIT’s units ended Friday at S$0.57.

The pricing is subject to a book-building process, with the results to be announced later, it said.

The placement is subject to an upsize option which could raise a total of up to around S$100 million, the REIT said.

The private placement price range is an around 6.5 percent to 8.3 percent discount to the volume weighted average price of S$0.5616 for trades on Friday, the REIT said.

The preferential offering of new units to existing unitholders is set to raise up to S$75 million, the filing said.

The private placement and the preferential offering pricing may be different as the latter won’t be underwritten, the REIT said.

The REIT’s sponsor, ESR Cayman, which holds 9.4 percent of the REIT’s units, will take up its full allocation under the preferential offering and will take up any unsubscribed units, the REIT said.

Citigroup Global Markets Singapore and RHB Securities Singapore are the joint global coordinators and bookrunners, the REIT said.

The REIT said the fundraising is expected to strengthen the balance sheet, bringing its total leverage down to 39.6 percent from 42.0 percent, as of end-March levels. In addition, it said the increased number of units was expected to increase trading liquidity.

The fundraising is subject to unitholder approval.

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