Saizen – CNA
Saizen REIT unit gets S$15.7m loan from Japan’s Mizuho bank
Yugen Kaisha JOF, a subsidiary of mainboard-listed Saizen REIT, has entered into an agreement for a S$15.7-million loan from Japan’s Mizuho Bank.
The loan, which has been fully disbursed, has a term of 10 years.
Under the terms, the asset manager of Saizen will act as a guarantor for the loan, and the property portfolio of Yugen will be pledged as security for the loan.
The proceeds will be used to fully repay a S$6.3-million short-term bridging loan that the Saizen unit has from Star Finance, and the balance will be used for working capital purposes.
Saizen said on Thursday its asset manager plans to explore further financing possibilities with Mizuho.
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.
SREITs – BT
S-Reit outlook still negative: Fitch
This despite better share prices and refinanced debt
SINGAPORE-listed real estate investment trusts (S-Reits) have mostly refinanced their maturing debt obligations this year and have benefited from a recent share price recovery, noted Fitch Ratings in a new special report. But questions still remain regarding their financial flexibility and refinancing ability, the ratings agency said.
Fitch is also maintaining its overall negative outlook for the sector, owing to negative asset performance expectations. However, the credit performance of the sector is expected to be driven by the industry sub-sector, hence individual S-Reits may have different outlooks.
The report noted that 12 out of 20 S-Reits, for which information was publicly available, reported a decline in the value of total assets as at end June 2009, from a year ago, largely on the back of falling asset prices and write-downs. Office S-Reits, in particular, reported a 4.2 per cent drop in total assets in the year ended June 2009, compared with an increase of about 54 per cent in the previous year, while retail S-Reits added 1.5 per cent to their total assets in the same period.
S-Reits, like property-related companies globally, have been buffeted by the global financial crisis, Fitch noted.
‘A limited availability of debt financing and stock price corrections have forced S-Reits to restrict their previous aggressive asset acquisition programmes and concentrate on survival and tenant retention in a difficult market,’ noted the report.
But S-Reits responded to the changing market dynamics by sourcing bank loans in advance for their refinancing, and reducing their capex and acquisition plans as well as their development pipelines. Some S-Reits also successfully issued equity. But while these steps are positive from a ratings standpoint, they do not address other aspects of the debt structure and liquidity profile on which Fitch continues to have concerns.
‘In addition to dealing with a worsening asset performance, S-Reits are expected to tread cautiously in terms of their debt maturity profiles and liquidity provisions,’ said the report. ‘S-Reits will also need to improve their liquidity profiles as they come out of the crisis, to meet their debt refinancing requirements in the short to medium term.’
The requirement for S-Reits to distribute a major portion of their earnings affects their liquidity profiles, said Fitch. This, coupled with concentrated debt maturity profiles, can significantly increase the refinancing risk around S-Reits.
Looking ahead, S-Reits are now expected to continue their moderate leverage stance, but shift their focus to enhancing their capital markets reach. ‘They are likely to concentrate more on improving their debt maturity profiles, and expanding their relationships across banks to improve access to the bank loans’ market,’ said Fitch.