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See circular to unitholders here.
It seems that there will not be any rights issue as the acquisition would be financed with the proceeds from a private placement of new units and a S$1,105.0 million debt facility. I generally do not like share placements as it does not allow minority unitholders to take part. However, if the new units are issued at a price close to the market price, it is not too big an issue. The acquisition is expected to increase Suntec REIT’s DPU marginally from 8.611c to 8.699c. So, I guess I won't have to do anything here.
OCBC published this today while maintaining its BUY call:
Debt facility secured at very competitive all-in cost of debt of 3.12%; timing, issue price of private placement equity portion dependent on market conditions.
Suntec REIT kept at Buy by OCBC; Best office proxy. Revises issue price assumption down to $1.30 per unit from $1.50, but fair value estimate slips only marginally to $1.63 from $1.64 due to lower-than-expected cost of debt.
Friday, 19 November 2010
Friday, 19 November 2010
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Related post:
Suntec REIT: MBFC.
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3 comments:
Suntec REIT raised $428.8 million on Monday through a private placement of new units.
The trust issued 313 million new units at $1.37 each, nearing the top end of $1.34 and $1.38 range it set earlier, with the placement 3.1 times oversubscribed.
Quite demand on that.Must be a good buy.
TN
Hi TN,
Usually, the fear that comes with private placements in a REIT is a lowering in DPU.
Since this will not be the case with Suntec REIT and, in fact, the DPU will see a marginal increase after the proposed MBFC acquisition and share placement, demand for this REIT should stay robust. :)
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