ART – BT

Ascott Reit raises $453m from private placement

ASCOTT Residence Trust (Ascott Reit) has concluded one part of its equity fund-raising exercise, collecting $453.2 million from a private placement of 419.7 million new units.

The new units were priced at $1.08 apiece – at the lower end of the $1.07-$1.13 range indicated on Monday.

Of the 419.7 million new units placed out, 203.2 million went to CapitaLand, parent of the Reit’s sponsor The Ascott Ltd.

The remaining 216.5 million units for institutional and other investors were three times subscribed. Demand came from investors in Asia, Australia and Europe.

The placement has enabled Ascott Reit to enlarge its institutional investor base, said Lim Jit Poh, chairman of Ascott Residence Trust Management Ltd, the Reit’s manager. The new units are expected to start trading on Sept 22 at 2pm.

The second part of the equity fund-raising exercise involves a non-renounceable preferential offering that could raise $72.6 million. Ascott Reit will issue 67.9 million new units at $1.07 each – at the lower end of the indicated $1.07-$1.11 range. The offer, on the basis of one new unit for every 10 existing ones, opens on Sept 24 and closes on Sept 30.

CapitaLand will subscribe for new units in the preferential offering. This, together with the subscribed 203.2 million placement units, will enable it to maintain its pre-preferential offering stake of 47.74 per cent in the Reit.

Ascott Reit units, in which trading was halted on Tuesday, resumed trading yesterday, closing two cents up at $1.17 on a ‘cum trading’ basis. Today is the last day of the cum trading for the preferential offering and an advance distribution (estimated at 1.6 cents per existing unit), which the trust manager intends to declare in conjunction with the equity fund-raising.

The entire equity fund-raising exercise could bring Ascott Reit $525.8 million – to part-fund its $969.6 million purchase of 28 service residence properties in Europe and Asia from The Ascott Ltd.

According to Reuters yesterday, UOB-Kay Hian has maintained its ‘buy’ rating and share price forecast of $1.40 for Ascott Reit.