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Tue, November 10, 2020-10: 00 am
ASCENDAS Real Estate Investment Trust (Ascendas Reit) has launched a private placement and preferential offering to raise gross proceeds of around S $ 1.2 billion.
This will go toward financing its potential and proposed overseas acquisitions, including the purchase of two office properties in San Francisco for $ 560.2 million that was also announced Tuesday morning.
According to the capital fundraising exercise, the issue price of the placement will be between S $ 3,026 and S $ 3,121 for each new unit.
That represents a discount of approximately 2.8-5.7 percent to the volume weighted average price (VWAP) of S $ 3.2096 per unit of all trades in Ascendas Reit’s stock on November 9, up to the time the deal is signed. subscription on November 10.
The private placement of between 256.3 million and 264.4 million units to institutional and other investors is aimed at raising gross proceeds of about S $ 800 million.
Meanwhile, the preferential offer to unitholders will have an issue price of between S $ 2.96 and 3.05 per new unit, with a discount of 5% to 7.8% against the VWAP.
The prorated and non-waivable preferential offer of up to 133.9 million new units will generate gross revenues of around S $ 400 million, the manager said.
Of the gross proceeds, around half or S $ 614 million will partially finance the potential purchase of a data center portfolio in Europe, while another S $ 180 million will be used for the potential acquisition of a suburban office property. in Australia.
These two agreements are subject to the completion of negotiations with the supplier and satisfactory due diligence; Ascendas Reit’s manager is evaluating both potential acquisitions and may or may not proceed with them.
Approximately S $ 380 million of gross proceeds will partially finance the proposed acquisition of the two San Francisco properties.
The trust manager said Tuesday that both office buildings were completed in 2017 and are fully leased to technology tenants, payment giant Stripe, as well as image-sharing and social media platform Pinterest, for an average lease maturity ( WALE) of 9.1 years.
This will stretch the total WALE portfolio to 4.1 years from 3.9 years for rental income at the end of September.
The purchase price of $ 560.2 million is below the independent market valuations of the properties of $ 573 million as of October 15.
The manager added that he will be able to “plant a foothold” in San Francisco, the epicenter of the US tech ecosystem and a life sciences group, with the proposed deal.
The two office properties, a seven-story building at 510 Townsend Street and a six-story building at 505 Brannan Street, are located within the South of Market submarket, which has one of the highest concentrations of tech tenants in the city. . Other key tenants in the vicinity include Adobe, PayPal, Airbnb, and Cruise Automation.
Stripe and Pinterest will increase Ascendas Reit’s exposure to the digital, biomedical and technology media industry in the United States to 75 percent, from 65 percent at the end of September, the manager said.
As the properties are located on freehold land, the proposed acquisition will also increase the proportion of freehold properties in the trust’s portfolio to 34.2 percent of asset value, from 30.2 percent.
The property’s net income return for the first year is approximately 4.9 percent of pre-transaction costs and 4.8 percent of post-transaction costs. The annualized pro forma impact on the fiscal year 2019 distribution per unit (DPU) is expected to be an improvement of 0.129 Singapore cents, assuming the proposed acquisition was completed on April 1, 2019.
The proposed acquisition is expected to take place within the current financial year.
The manager of Ascendas Reit requested a cessation of operations on Tuesday before the market opened. Its units rose 0.02 Singapore dollars or 0.6 percent to end at 3.19 Singapore dollars on Monday.
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