See why Ascott Residence Trust raised S$253.7m through underwritten rights issue

Gearing up for Asia acquisitions.

ART has launched an underwritten renounceable rights issue to raise approximately S$253.7m, which according to OCBC Investment Research, will go to funding near-term acquisitions in the Asia region.

"Management has indicated that the chief motivation of the rights issue is to ensure financial flexibility, particularly for potential acquisitions in Asia that it hopes to close in 1H14," said the research firm.

Approximately S$204.9m (or 80.8% of the gross proceeds) will be used to pay down debt (bringing gearing from 41.1% to ~35%) and S$45.0m (17.7% of gross proceeds) will be used for capex and AEI, among other costs, it added.

OCBC said existing unitholders can subscribe for one right unit at S$1 each for every existing five units held. This represents a discount of approximately 22.5% to the closing price of S$1.29 per unit as at 4 November.

"The Ascott Limited, which owns 45.3% of ART, has undertaken to subscribe in full its allotment of rights units. Those who do not wish to subscribe for the rights units may sell their rights entitlements during the nil-paid rights trading period," it said further.