CAPITAMALL Trust, Singapore's largest real estate investment trust (Reit), may raise as much as $500 million in a share sale to pay debt and fund acquisitions.
'The funds provide financial flexibility to pursue yield accretive acquisition opportunities.' - Pua Seck GuanCapitaMall will sell as many as 137.7 million new shares to institutional investors at between $3.63 and $3.70 apiece, it said in a statement late on Monday, representing a discount of as much as 3.5 per cent from Monday's closing price of $3.76.
The trust will reduce its debt to 33 per cent of assets from 41 per cent, allowing it to borrow more as it seeks out acquisitions in the city's shopping mall industry.
Singapore's central bank allows Reits with a credit rating to raise debt to 60 per cent of assets.
The funds 'provide greater financial flexibility to pursue yield accretive acquisition opportunities in Singapore', Pua Seck Guan, chief executive officer at the trust's management company, said in the statement.
The trust said that it will repay its debt of $453.6 million, which it took to buy bonds for three Singapore malls and a 20 per cent share of CapitaRetail China Trust, a property trust that owns shopping centres in China.
CapitaMall plans to raise $350 million in the initial sale, and may issue a further $150 million of shares 'in the event of a favourable response', it said in the statement.
'It's getting quite challenging to buy good shopping malls in Singapore,' said Nicholas Mak, Singapore-based research director at Knight Frank, a property consulting company. 'Most of them have already been acquired. Others are owned by listed property funds or the owners are simply not that keen to sell.'
The stock has risen 29 per cent this year, the second-best performing Reit among 17 trusts traded on the Singapore exchange, which have an average return of 6.8 per cent this year.
CapitaMall is 'refinancing its higher-cost debt due to still-strong demand for the shares', said David Lum, an analyst at Daiwa Institute of Research Singapore. He does not expect the trust to pursue acquisitions 'in the immediate future'.
CapitaMall's shares were suspended from trading for the announcement. The share sale is being managed by DBS Group Holdings and UBS, CapitaMall said. -- Bloomberg
Related Link :-
http://tinyurl.com/2d2dhq
CIT's news release
http://tinyurl.com/ywc4tr
Financial statement
http://tinyurl.com/29n5zg
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