Singapore’s Suntec REIT raises $147m via private placement

Suntec Singapore photo from ARA Asset Management's website.

Singapore-listed Suntec Real Estate Investment Trust (Suntec REIT) has raised gross proceeds of approximately S$200 million ($146.79 million) in a private placement exercise.

The REIT intends to deploy nearly 84 per cent (S$167.5 million) of the proceeds to finance acquisition of properties, primarily in Australia. It will use the rest towards refinancing existing debt, capital expenditure and other asset enhancement initiatives.

In a statement on April 25, 2019, Suntec said, it has closed the private placement exercise of 111,111,000 new REIT units priced at S$1.80 per unit, mopping up gross proceeds of S$200 million ($146.79 million).

Net proceeds amount to S$195.9 million after deducting underwriting, selling, and management fees.

Suntec REIT holds interests in Singapore’s prominent property landmarks such as Suntec City, Suntec Singapore Convention & Exhibition Centre, One Raffles Quay, Marina Bay Financial Centre Towers 1 and 2 and the Marina Bay Link Mall. Suntec REIT, managed by ARA Trust Management (Suntec) Limited, also owns properties in Australia.

Arun George, IPOs, M&A and TMT analyst from Global Equity Research Ltd, and a Smartkarma Insight provider, pointed out that Suntec will use part of the proceeds to finance property acquisitions in Australia. He welcomed the equity funding move to finance the acquisitions as Suntec’s debt of S$3.6 billion and an aggregate leverage ratio of 38.6 per cent in 1QFY2019, left limited head room (the mandatory leverage ratio cap limit for Singapore-listed REITs is 45 per cent).

The issue price per new unit of S$1.80 works out to a discount of 4.2 per cent of the volume weighted average price (VWAP) of S$1.879 per unit in Suntec REIT, and 2.5 per cent to the adjusted VWAP of S$1.847 per unit.

Suntec REIT’s unit price closed the trading session on April 24 at S$1.89, and the total market capitalisation for Suntec REIT last stood at approximately S$4.932 billion on April 25.

Suntec REIT units price fell by 5 Singapore cents, or minus 2.65 per cent to S$1.84 at 3:47 pm Singapore time on April 25 following the private placement announcement. The total trading volume was heavy with 21.55 million shares changing hands, compared to the three-month average trading volume of 6.92 million shares. The 12-month consensus price target for Suntec REIT is S$1.83 per unit, according to data provided by Yahoo! Finance.