Category: KepREIT
K-REIT – BT
K-Reit slides 5.1% after $620m cash call
Nomura sees rights issue lowering cost of capital for any acquisitions ahead
K-REIT Asia’s $620 million cash call on Wednesday night caught the market by surprise, and its units fell as much as 6.8 per cent or eight cents soon after trading began yesterday.
The counter recovered slightly to close at $1.12, 5.1 per cent or six cents down. Some 3.58 million units changed hands.
Most investors and analysts did not see the one-for-one renounceable rights issue coming because K-Reit’s gearing was comparatively lower than its peers’.
After conducting a rights issue in January last year to raise $551.7 million, it had cut its aggregate leverage from 53.9 per cent to 27.6 per cent.
K-Reit’s debt-funded purchase of six strata floors in Prudential Tower would have raised its leverage to 33 per cent, but that would have remained close to the industry’s average gearing level. The rights issue would shave its leverage sharply down to 9.1 per cent.
K-Reit also revealed a 6.3 per cent drop in the value of its assets on Wednesday, from $2.1 billion as at Dec 31 last year to $1.97 billion as at Sept 29.
OCBC Investment Research analyst Foo Sze Ming believes that K-Reit could be taking advantage of the recent rise in its unit price to boost its balance sheet. The counter crossed $1.20 last month, after staying below that level for almost a year.
K-Reit could be preparing to take on Keppel Land’s stake in the Marina Bay Financial Centre (MBFC), he adds. ‘Tower 1 and 2 of MBFC are due to be completed in 2Q 2010 and the divestment of KepLand’s 33.3 per cent stake in this project could come as early in 2Q 2011.’
Nomura Singapore analyst Sai Min Chow views the rights issue positively because it gives K-Reit more debt headroom, lowers the cost of capital for potential acquisitions and improves stock liquidity.
K-Reit said that it could have an additional funding capacity of around $438.3 million to $647.8 million, assuming an aggregate leverage of 30-40 per cent.
But he also estimates a 31-32 per cent dilution in forecasts of K-Reit’s distribution per unit for FY10-11, and a 27 per cent dilution in its book value.
K-REIT – BT
K-Reit Asia proposes rights issue to raise $620m
80.8% of gross proceeds will be used to repay loans from Kephinance
K-REIT Asia yesterday proposed a one-for-one rights issue to raise some $620 million in gross proceeds.
The proposed issue price of 93 cents per unit is at a 21.2 per cent discount to yesterday’s closing price of $1.18 per unit. The issue price is also an 11.8 per cent discount to the theoretical ex-rights price of $1.06 per unit.
Chief executive Ng Hsueh Ling of K-Reit Asia Management (the manager of K-Reit Asia) said that the proposed issue of about 666.7 million units at this price would ‘provide significant funding headroom and put K-Reit Asia in a strong financial position to seize future acquisition opportunities’.
The manager intends to use 80.8 per cent of the gross proceeds to repay loans from Kephinance Investment. These include a bridging loan to be drawn down for the acquisition of six strata floors of Prudential Tower.
Another 18.5 per cent of the proceeds will fund K-Reit Asia’s ‘potential acquisitions and asset enhancement initiatives’, and for general corporate and working capital purposes.
Estimated fees and expenses incurred for the rights issue are expected to take up the remaining 0.7 per cent.
The completion of this rights issue is expected to bring K-Reit Asia’s leverage down, from 33 per cent to 9.1 per cent. This implies an additional funding capacity of about $438.3 million to $647.8 million, which the manager says will enhance its financing flexibility.
In support of the rights issue, Keppel Corporation and Keppel Land Limited have undertaken to subscribe for their pro-rata entitlement of rights units, via their respective wholly owned subsidiaries. Together, they own about 75.8 per cent of K-Reit Asia’s units in issue.
The remaining 24.2 per cent of rights units will be underwritten by BNP Paribas Singapore, which is acting as lead manager, underwriter and financial adviser for this rights issue.
The rights units will be equal in all aspects to the existing units in issue, and will be entitled to any distribution accrued to units from July 1 onwards.
Unitholders who do not wish to subscribe for the rights units have the option to renounce or sell their rights entitlements during the ‘nil-paid’ rights trading period to realise their value. Entitled unitholders may also apply for excess rights units.
An extraordinary general meeting will be convened to obtain unitholders’ approval of this rights issue.
K-REIT – CNA
K-REIT to raise S$620m through one-for-one rights issue
It is offering about 667 million rights units at 93 cents each, representing a 21.2 per cent discount to K-REIT Asia’s closing price of S$1.18 per unit on September 30.
K-REIT Asia said it intends to use about 80 per cent of the gross proceeds to repay borrowings provided by Kephinance Investment. This includes a bridging loan to be drawn down for the acquisition of six strata floors of Prudential Tower.
The remaining proceeds are to be used to fund potential acquisitions and asset enhancement initiatives, as well as general corporate and working capital purposes.
When the rights issue is completed, K-REIT Asia said its aggregate leverage is expected to decrease from 33 per cent to 9.1 per cent.
Keppel Corporation and Keppel Land, which together own about 75.8 per cent of K-REIT Asia’s units, have undertaken to subscribe for their entitlement of rights units.
The remaining 24.2 per cent of rights units will be underwritten by BNP Paribas, Singapore Branch, which is acting as lead manager, underwriter and financial adviser for the rights issue.
An extraordinary general meeting is expected to be convened to approve the rights issue.