Mapletree Commercial Trust launches placements to raise at least $902.3m for acquisition

Mapletree Commercial Trust is looking to raise at least $902.3 million to partially fund its $1.55 billion acquisition of Mapletree Business City (Phase 2). PHOTO: MAPLETREE COMMERCIAL TRUST MANAGEMENT

SINGAPORE - Mapletree Commercial Trust (MCT) has proposed an equity fundraising comprising of 406.5 million new units to raise at least $902.3 million, to partially fund its $1.55 billion acquisition of Mapletree Business City (Phase 2), it said on Wednesday (Oct 16).

The Reit (real estate investment trust) manager also announced that it had obtained unitholders' approval at an extraordinary general meeting held on Tuesday for the proposed acquisition of Mapletree Business City (Phase 2), that would enlarge MCT's asset size from $7.4 billion to $8.9 billion.

For the three months ended Sept 30, the commercial landlord posted a distribution per unit (DPU) of 2.32 Singapore cents, up from 2.27 cents a year ago. The trust, which released its financial results on Tuesday, noted that better portfolio contribution boosted its second-quarter performance.

The equity fundraising includes a private placement of 200.9 million new units at an issue price of between $2.24 and $2.28 per unit to raise gross proceeds of at least $450 million, as well as a non-renounceable preferential offering of about 205.6 million units on the basis of 71 new units for every 1,000 existing units in MCT, held as at Oct 24, 5pm.

MCT requested a trading halt on Wednesday morning following this announcement. Its units closed at $2.34 each, down 0.4 per cent, or one Singapore cent on Tuesday.

The private placement issue price range represents a discount of between 4.6 per cent and 2.9 per cent to the $2.3484 volume-weighted average price (VWAP) of MCT units for all trades done on Oct 15, while the preferential offering issue price range represents a discount of between 6.3 per cent and 4.6 per cent to the VWAP.

The manager intends to use the bulk of the gross proceeds, or about $884.9 million to partially fund the acquisition, with another $17.4 million for other expenses. The balance of the total acquisition cost will be funded via the drawdown of new loan facilities, and/or existing loan facilities granted to MCT, it said.

Given the size of the acquisition cost, the manager's aim to maintain a well-balanced capital structure, and the borrowing limit imposed by the Monetary Authority of Singapore on property funds such as MCT, the manager believes that the equity fundraising is an "efficient and overall beneficial method" of raising funds to finance the acquisition.

The placement units are expected to be listed on the Singapore Exchange at 9am on Oct 25.

The preferential offering will open on Oct 30 at 9am, with entitled unitholders able to accept and apply for preferential offering units up till Nov 7. These units are expected to begin trading on Nov 15 at 9am.

Citigroup Global Markets Singapore, DBS Bank and UBS AG, Singapore have been appointed as the joint global coordinators and bookrunners for the equity fundraising.

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