Manulife US Reit raises $196.8 m from placement, preferential offering

Manulife US Reit's fundraising will partially pay for its US$198.8 million acquisition of a Class A office building in Sacramento, California.
Manulife US Reit's fundraising will partially pay for its US$198.8 million acquisition of a Class A office building in Sacramento, California.PHOTO: MANULIFE US REIT

SINGAPORE - Manulife US Reit's private placement and preferential offering has netted gross proceeds of about US$142.7 million (S$196.8 million) after both priced in at the top end of their issue price range, its manager said on Friday (sept 20).

The pure-play US office Reit had planned to raise US$142.1 million from the equity fundraising for its latest acquisition.

The issue price of the private placement, which was more than seven times covered, was US$0.876 per unit. It represents a discount of 3.6 per cent to the volume weighted average price (VWAP) of US$0.9089 for all units traded on Wednesday, the last market day before the placement's underwriting agreement was signed.

The price range previously announced was US$0.849 to US$0.876 per unit.

The preferential offering's issue price was US$0.86 per unit, representing a discount of 5.4 per cent to the VWAP of US$0.9089 per unit. Its price range was between US$$0.833 and US$0.86 per unit.

An upsize option to raise another US$15 million from the private placement was fully taken up.

An advanced distribution will be declared for the period from July 1, 2019 to the date immediately prior to the day new units are issued. Distribution per unit is estimated to range from 1.37 US cents to 1.57 US cents.

The new private placement units are expected to be issued on or around Sept 30, 2019.

Of the gross proceeds raised, about US$80 million was from the private placement while US$62.7 million was from the preferential offering.

About US$135.4 million, or 94.9 per cent of the proceeds, will be used to partly finance its US$198.8 million acquisition of a Class A office building in Sacramento, California.

About US$7.3 million will be used to pay for fees and expenses related to the two equity fundraising exercises.

Amid a lower-for-longer interest rate environment, Manulife US is the third Reit this week to announce equity fundraising to fund new acquisitions, after Keppel DC Reit and Mapletree Industrial Trust.

Its units closed flat at US$0.91 on Wednesday before Thursday's trading halt. It lifted its trading halt on Friday morning, after the close of its fundraising exercises.