ESR-Reit to raise $150 million as it acquires Singapore, Australia assets

ESR-Reit is looking to fund the acquisition of a logistics facility as well as asset enhancement initiatives for properties in Tai Seng (above) and Ang Mo Kio.
ESR-Reit is looking to fund the acquisition of a logistics facility as well as asset enhancement initiatives for properties in Tai Seng (above) and Ang Mo Kio.PHOTO: ESR REIT

SINGAPORE (THE BUSINESS TIMES) - ESR-Reit is looking to raise about $150 million via a private placement and preferential offering to fund its $119.2 million acquisition of a Tanjong Penjuru logistics facility, as well as asset enhancement initiatives for properties in Tai Seng and Ang Mo Kio.

The real estate investment trust has also obtained a $68.5 million unsecured loan to finance the acquisition of a 10 per cent interest in a GIC-majority-owned Australian logistics investment for A$60.5 million (S$62.4 million).

The investment, ESR Australia Logistics Partnership, indirectly holds 33 income-producing properties, two land parcels for future development and two properties which are currently under development, ESR-Reit's manager said in a bourse filing on Thursday (May 6).

Singapore sovereign wealth fund GIC holds an 80 per cent stake in the fund, while ESR Queensland Hold Trust holds the remaining 20 per cent. The private fund is managed by an indirect subsidiary of ESR Cayman, the Reit's sponsor.

The fund's portfolio comprises properties in five Australia states - New South Wales, Victoria, Queensland, South Australia and Western Australia. These have a total land area of about 1.3 million square metres, an occupancy rate of 95.9 per cent and a weighted average lease expiry of 4.87 years as at March 31.

The Australian acquisition will cost an estimated A$64.9 million, comprising the A$60.5 million purchase price and $2.5 million in fees to be incurred in connection with the deal. This whole amount will be financed fully through debt.

ESR Queensland Hold Trust has entered into a unit sale agreement with the trustee of ESR-Reit to sell 10 per cent of ESR Australia Logistics Partnership. The Australia acquisition is expected to be completed in May 2021.

For the Singapore acquisition, ESR-Reit is proposing a private placement of between 195.3 million and 201.6 million units to institutional investors and other investors at an issue price of between 37.2 Singapore cents and 38.4 cents, to raise at least $75 million.

The private placement is subject to an upsize option which brings the amount raised to a maximum of $100 million.

Citigroup Global Markets Singapore and DBS are the joint global coordinators and bookrunners for the private placement.

ESR-Reit's manager also plans to undertake a non-renounceable preferential offering of new units to raise no more than $50 million. The preferential offering will not be underwritten.

Details of the offering have not been determined as at the date of the announcement but the manager said the issue price of the offering may differ from the private placement's issue price.

It expects both the Singapore and Australia acquisitions to be distribution per unit-accretive.

ESR-Reit called for a trading halt before the market opened on Thursday, prior to the announcements. Its units closed flat at $0.41 on Wednesday.