Ascott Reit gains $150m from private placement

Good way to start the year.

According to a release, Ascott Residence Trust (Ascott Reit) has successfully raised gross proceeds of S$150 million through a placement (Private Placement) of 114.9 million New Units at an issue price of S$1.305 per New Unit.

Mr Ronald Tay, Ascott Residence Trust Management Limited’s (ARTML) Chief Executive Officer, said: “This equity placement will allow us to increase our financial capacity to fund potential future acquisitions. This will in turn enable us to further grow and enhance Ascott Reit’s portfolio to boost Unitholders’ returns. We remain confident in the markets where we operate in as we continue to grow the business and enhance value for Unitholders.”

The proceeds will be primarily used to fund potential future acquisitions, finance asset enhancement initiatives, repay existing debt and for general working capital.

Assuming that the net proceeds are used to repay existing debts, the Private Placement is expected to reduce Ascott Reit’s aggregate leverage from 40.1% to 34.9%.  

The issue price of S$1.305 per New Unit represents a discount of approximately 4.6% to Ascott Reit’s adjusted volume weighted price of S$1.3685 per Unit, for trades done on the Singapore Exchange Securities Trading Limited (SGX-ST) on 28 January 2013.

The volume weighted price has been adjusted by 4.85 cents, being Ascott Reit’s semi-annual distribution2 for the period from 1 July 2012 to 31 December 2012 and the midpoint of the estimated advanced distribution for the period from 1 January 2013 to 5 February 2013.

The New Units are not entitled to the abovementioned distributions.

The Private Placement will increase Ascott Reit’s free float from 51% to 55% and this is expected to improve the level of trading liquidity of its Units.

The successful Private Placement has enabled Ascott Reit to enlarge its institutional investor base as it received participation from existing and new institutional investors from Asia, the United States and Europe.

The joint bookrunners and underwriters of the Private Placement are DBS Bank Ltd and Standard Chartered Securities (Singapore) Pte Limited.