ART’s ATM offering of 8m units fully subscribed

ASCOTT Residence Trust (ART), which is selling 105.3 million new units to raise $199 million, yesterday said that the ATM offering of 8 million units at $1.90 per unit was fully subscribed by retail investors yesterday.

The news follows Monday’s announcement that the 47.3 million new units offered to institutional and other investors on that day were more than 15 times subscribed. Another 49.9 million units are being offered to existing stockholders at $1.88 apiece. The stock offered to existing stakeholders is based on one new share for every 10 they own, ART said. ART is raising the $199 million to finance the acquisition of five properties in Australia, Japan, the Philippines and Vietnam.

‘We are pleased that the ATM offering of 8 million new units was fully taken up, as this demonstrates that retail investors have endorsed our latest acquisitions and equity fund raising exercise,’ said Chong Kee Hiong, chief executive of the trust’s management team. ‘ART will continue to pursue its proven acquisition strategy of acquiring yield-accretive assets in the pan-Asian region to achieve our target portfolio value of about $2 billion by end-2008.’

ART owns some of the properties managed by The Ascott Group, which is the biggest operator of serviced residences in Asia and Europe. Ascott is also expanding to increase the number of apartment units to 25,000 by 2010, from more than 19,000 at present.

Once the acquisitions and the fund raising are complete, unitholders of ART can expect a higher annualised distribution per unit (DPU) of 7.28 cents in 2007. This is an 11.5 per cent increase over the annualised forecast DPU of 6.53 cents in 2007 for the 14 properties in ART’s portfolio before the acquisition.

ART’s shares closed 8 cents down at $2.00 yesterday. The new units are expected to begin trading on March 26.

CapitaLand cuts Ascott trust stake to 37%

SINGAPORE – South-east Asia’s largest property developer CapitaLand said on Wednesday it would sell 100 million units in Ascott Residence Trust, reducing its interest to 37.3 per cent from 53.8 per cent. The property developer said in a statement that it would place out 100 million Ascott trust units at $1.90 each to JP Morgan (S.E.A.) Ltd, which would in turn get buyers for the units. CapitaLand said the sale would result in $30.3 million profit after tax and minority interests.

Ascott trust, a property trust spun off by serviced apartment firm Ascott, said on Monday that it will raise about $199 million for acquisitions by selling new units. The placement includes a non-renounceable preferential 1-for-10 rights offering of 49.94 million new units at an issue price of between $1.83 and $1.88 a unit. The trust will also offer up to 50.17 million new units to institutional investors and 8 million new shares to retail investors, in both cases priced at between $1.85 and $1.90 a unit. JP Morgan is managing the deal. — REUTERS

Equity Raising

Equity fund raising. ART has proposed to raise gross proceeds of S$199m to part finance a target acquisition of five properties. Certain part of the proceeds will also be used to re-finance loans drawn for the acquisition of a 26.8% effective interest in the Vietnam Target Property, which was completed in Jan 2007 as well as other general corporate and working capital purposes. With the completion of the equity fund raising, the trust’s annualised 2007 forecast DPU will rise from 6.53 cents to 7.14 cents, an increase of 9.4%.

Maintain Buy with target price of S$2.20. As ART is the only pan-Asian serviced apartment trust, there’s little competition in acquiring properties to enhance their portfolio. We have revised our 2007 DPU estimates upwards from 5.2 cents to 6.7 cents due to lower provision of income tax from 18% to 15%. Projected MI is also reduced following management’s guidance in the latest circular. We expect earnings to continue to grow given the management’s plan to achieve property portfolio of S$2b by 2008. We maintain our fair value of S$2.20, backed by our DCF calculations. Maintain Buy.