SINGAPORE (Sept 20): The manager of Manulife US REIT announced Friday it has raised total gross proceeds of US$142.7 million ($196.6 million) from its private placement and preferential offering.
The private placement was more than seven times covered at the top end of the issue price range at 87.6 US cents, while the issue price under the preferential offering was fixed at 86 US cents.
The private placement and preferential offering issue prices represent discounts of 3.6% and 5.4%, respectively, to the volume weighted average price (VWAP) of all unit of Manulife US REIT traded on Wednesday – the last full market day prior to the signing of the underwriting agreement.
The preferential offering ratio was fixed on the basis of 52 new units for every 1,000 existing units in the REIT. The upsize option to issue additional new units in relation to the private placement was also fully exercised.
Some US$135.4 million, or 94.9% of the gross proceeds of the equity fund raising, will be used to finance part of Manulife US REIT’s proposed acquisition of a freehold 29-storey Class A office building in California.
The remaining US$7.3 million will be used to pay the estimated fees and expenses incurred by the REIT in connection with the proposed acquisition and equity fund raising.
See: Manulife US REIT to acquire California office building for $273.5 mil; launches equity fund raising
The new private placement units are expected to be issued on or around Sept 30.
The REIT intends to declare an advanced distribution for the period from July 1 up to the day immediately preceding the date of issue of the new units pursuant to the private placement.
The quantum of advanced distribution per existing unit is currently estimated to range from 1.37 US cents to 1.57 US cents.
Manulife US REIT is the third REIT this week to have commenced equity fund raising on the back of new acquisitions. Keppel DC REIT and Mapletree Industrial Trust made similar announcements on Sept 16 and Sept 18, respectively.
See: Keppel DC REIT launches equity fund raising to raise $473.8 mil for new acquisitions
See: Mapletree Industrial Trust raises $400 mil in private placement to help fund new acquisition
Maybank Kim Eng Research analyst Chua Su Tye says the Manulife US REIT deal could open doors to a potential re-rating ahead.
“The deal is accretive and should strengthen its overall AUM profile,” Chua says in a Thursday report. “Post-deal, we see DPU upside with low gearing of 36.6% supporting further acquisition opportunities, and potential re-rating from an index inclusion.”
Manulife US REIT sees itself a strong candidate for entry into the FTSE Nareit Developed Asia Index, which is expected to see a quarterly index revision announced by the end of the year.
“Post-deal and backed by new equity, management expects its free-float market cap to rise to US$1.3 billion – from US$1.16 billion pre-deal – and above the US$1.22 billion index threshold,” Chua notes.
As at 3.34pm, units in Manulife US REIT are trading half a US cent higher at 91.5 US cents.
