Manulife US REIT to raise $195.83m via equity fundraising to buy California office tower

About $185.77m will be used for the acquisition.

Manulife US REIT (MUST) aims to raise $195.83m (US$142.1m) through an equity fundraising to partially finance its acquisition of 400 Capitol Mall in California, according to an announcement.

Around $185.77m (US$134.8m) will be used to finance the acquisition, whilst the remaining $10.06m (US$7.3m) will be used to pay the fees and expenses related to the acquisition and fundraising.

Based on a separate press release, MUST entered a purchase agreement with 400 Capitol Mall Owner for a freehold 29-storey Class A office at an estimated aggregate purchase consideration of $274.13m (US$198.8m).

The office building has an occupancy rate of 94.9% and WALE of 5.9 years.

"Not only is this acquisition 2.3% accretive, based on our 1H 2019 pro forma DPU, but it may also trigger a re-rating story for MUST as we inch closer to the FTSE EPRA Nareit Index during its next review," Manulife US Real Estate Management CEO Jill Smith said.

About $89.58m (US$65m) will be raised through a private placement at an issue price of $1.17 (US$0.849) to $1.21 (US$0.876) per unit, whilst an estimated $106.25m (US$77.1m) will come from a preferential offering starting 27 September priced $1.15 (US$0.833) to $1.19 (US$0.86) per unit.