Q2 Results

Q1 Results

Indiabulls plans $200m rights issue at 16 cents a unit

Business trust also seeks to expand portfolio beyond office space

INDIABULLS Properties Investment Trust (IPIT) has proposed to issue some 1.25 billion new units at 16 cents each to raise $200.1 million.

The business trust also intends to look beyond office space to invest in retail, residential or hospitality assets.

IPIT is conducting the 53-for-100 renounceable and underwritten rights issue to reduce debt as the Mumbai office space market weakens – occupancies and rents have both declined, it said yesterday.

The trust had borrowings of $258.3 million as at June 30, against cash and cash equivalents of $6.7 million. The ratio of borrowings to total assets was 10.4 per cent.

Lower debt obligations would put it in a ‘better position to make commercial decisions’ and in a ‘stronger negotiating position with potential tenants’, it said.

The rights issue price of 16 cents is at a 48.4 per cent discount to IPIT’s closing price of 31 cents on Wednesday. The trust asked to halt trading in its units yesterday because of the cash call.

Of the $200.1 million to be raised, around $193 million, or 96.5 per cent, will go towards debt repayment. The remaining $7.1 million will pay for expenses incurred for the rights issue, and for corporate and working capital purposes.

Morgan Stanley Asia (Singapore) is the sole lead manager and underwriter of the deal.

Grapene Limited, which as at Sept 4 holds a stake of around 34 per cent in IPIT, made an irrevocable undertaking to take up its pro rata entitlement of 425.1 million rights units.

Grapene also inked a standby commitment agreement with Morgan Stanley Asia (Singapore) to subscribe for up to 700.4 million rights units in total, or 90 per cent of the rights units. The rights issue is subject to a whitewash resolution.

IPIT also proposed to adjust its principal objectives. ‘Having the flexibility to change the development mix of IPIT’s portfolio . . . would be prudent especially in light of the current slowdown in rentals as well as the softening of market demand for office space,’ it said.

From its initial focus of investing primarily in income-producing office space in India, IPIT could start looking at retail, residential or hospitality properties. It said it will keep more than 50 per cent of total lettable area in its portfolio in income-producing office space. IPIT could also start selling residential properties upon their completion.

IPIT will hold an extraordinary general meeting on Sept 29 to seek unitholders’ approval for the rights issue, whitewash resolution and expansion in objectives.

Business trusts and Reits allow unit-holders to receive dividend payments from operating cash flow instead of accounting profit. While Reits are required to pay 90 per cent of distributable income to unit-holders, there is no such requirement for business trusts.

Indiabulls Properties renegotiating lease agreements with tenants

Singapore-listed Indiabulls Properties Investment Trust said Wednesday it is currently re-negotiating lease agreements with tenants of its One Indiabulls Centre.

The property trust, which owns office properties in India, said that due to the global financial crisis, market conditions in India have deteriorated and rental rates for office space in Mumbai have dropped significantly.

It said some tenants of One Indiabulls Centre have recently renegotiated terms of their leases to reduce the monthly rental charges.

Indiabulls said it is currently in negotiations with the remaining tenants.

It continued to say that apart from rentals, other terms such as deposits payable and the size of the office space to be leased have also been revised downwards.

Indiabulls trust may not proceed with rights issue

INDIABULLS Property Management, which manages the Indiabulls Properties Investment Trust listed here, has clarified that it might not go ahead with a proposed $200 million rights issue.

In a statement, Indiabulls said that it is still in the process of evaluating various sources of funding and other means of capital management for its trust fund, including a rights issue and other borrowing facilities,

In evaluating the sources of funding, the manager will take into account the financial requirements of the fund and the prevalent market conditions to continue to build a solid foundation for long-term success and unitholders’ value maximisation.

Indeed, the trust manager said that it has not formally appointed an investment bank to act as the manager and underwriter of the rights issue or the terms of the rights issue.

Instead, it will make these decisions at a later stage depending on the financial requirements of IPIT and the prevalent market conditions at the material time.

However, it did make a listing application to the stock exchange for new units to be issued under a rights issue.