Keppel DC REIT launches private placement to raise up to S$204M

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Keppel DC REIT has launched a private placement of 81 million new units at S$2.47 to S$2.522 each to raise between S$200.1 million and S$204.3 million to partially fund its acquisition of a data center property in China and prepare for future deals, the REIT said Thursday.

“With the proceeds from the private placement, Keppel DC REIT will be able to act more expeditiously and be more responsive when pursuing potential growth opportunities, which are essential in a competitive environment where the timelines in making bids and making payment for acquisition of income-producing properties are important,” the REIT said in a filing to SGX.

Late last month, the REIT entered a deal to acquire Guangdong Data Centre for 635.9 million yuan, or around S$132 million, from Guangdong Bluesea Data Development (Bluesea) and its parent company, Guangdong Bluesea Mobile Development.

The units will be offered to eligible institutional, accredited and other investors, the REIT said.

The private placement’s price range is a 2.0 to 4.0 percent discount to the volume weighted average price of S$2.5742 a unit for trades on Wednesday, the REIT said. The issue price will be determined by a book-building process.

At the bottom of the range, raising S$200.1 million, Keppel DC REIT said it plans to use around S$67.9 million toward the acquisition of the Bluesea property, with the remainder of the deal price financed with debt.

Around S$128.6 million of the funds for the private placement will be used to fund future acquisitions and to repay debt to create debt headroom for future acquisitions, the filing said. Any balance after expenses may be used for general corporate and/or working capital purposes, the REIT said.

The REIT estimated its aggregate leverage would fall to around 34.7 percent from 36.7 percent after the placement.

The new units represent around 5 percent of the total number of units currently in issue; the REIT said increasing the total number of units would enhance free float and trading liquidity. The REIT said it expected the new units to begin trading on SGX on or around 23 August.

An advance distribution of 1.401 to 1.441 Singapore cents will be made to existing unitholders prior to issuing the new units, the REIT said.

Shareholder approval isn’t required for the placement.

Citigroup Global Markets Singapore, DBS Bank, OCBC and Credit Suisse (Singapore) were appointed as joint bookrunners and underwriters for the private placement.