AREIT – BT

Four banks to help A-Reit raise $275m: report

Three development projects completed by the Reit in FY2009, says CIMB

ASCENDAS Real Estate Investment Trust (A-Reit) is said to have hired four banks to help it raise $275 million to pay maturing debt.

According to a Bloomberg report that quoted an unnamed source, Australia and New Zealand Banking Group, OCBC Bank, Natixis and Standard Chartered plan to syndicate a three-year loan to other banks by mid-July.

In response to a query from BT, Tan Ser Ping, CEO of the trust manager, said: ‘We have always been and will continue to explore opportunities to increase and diversify our sources of debt funding.’

Stanchart and OCBC declined to comment on the Bloomberg report.

‘The banks may provide indicative pricing to lenders as early as next week,’ the report quoted its source as saying.

A-Reit’s major debt that needs refinancing this year is $300 million of commercial mortgage-backed securities due in August.

‘Refinancing of this loan has already been taken care of through a committed term loan of $200 million and another $100 million from equity raised in January 2009,’ Mr Tan said.

Separately, CIMB-GK Research issued a research note yesterday, maintaining a ‘neutral’ on A-Reit, with a target price of $1.63. The report was based on feedback during a recent roadshow in Kuala Lumpur.

‘Management admits that the outlook for the industrial market remains poor,’ the report said. ‘It expects occupancy of its sale-and-leaseback buildings to hold at 100 per cent, and that of its multi-tenanted buildings to decline.’

The report said the decline will come from existing tenants.

At the same time, CIMB pointed out that A-Reit completed three development projects in FY 2009 – Pioneer Hub, 15 Changi North Way and 3 Changi Business Park Crescent – which will contribute to the current year’s top line.

As far as acquisitions are concerned, ‘management is more inclined to be conservative in view of unpredictable access to capital’, the report said.

A-Reit closed at $1.57 yesterday, down eight cents.