REITs raise more than $3.7 bil in follow-on capital raising and perps

REITs are probably still the best friends of bankers. So far this year, S-REITs have raised around $3.7 billion in equity and quasi-equity such as perpetual securities or perps. This does not include the perps that were issued to refinance those that were called by Ascendas REIT and Keppel REIT which was announced on Sept 7.

On Sept 30 though, Keppel REIT issued an additional $150 million of perps (see table). Altogether, Keppel REIT issued $300 million of perps, out of which $150 million was used to refinance the series that had a call date this year.

Frasers Centrepoint Trust leads the pack in equity fund raising. Together with the preferential offering and placement, it raised a total of $1.33 billion which is the largest ever follow-on equity fund raising by a Singapore REIT. FCT also announced the largest acquisition by a REIT this year — if the merger of CapitaLand Mall Trust and CapitaLand Commercial Trust is excluded — of a 63.1% stake in PGIM Asia Retail Fund that it did not already own.

On Oct 19, Elite Commercial REIT announced the proposed acquisition of 58 commercial properties in the UK held in Elite UK Commercial Fund II. This fund is managed by Elite Partners Capital and largely held by PartnerRe, the reinsurance arm of Exor, which in turn counts the Agnelli family as its major shareholder.

“This pandemic has put stress onto the macro environment, evident by the increasing unemployment rate across the world. UK unemployment has surged by 2.7 million since the lockdown and the government has pledged more finance for the Department of Works and Pensions (DWP). This is a uniquely countercyclical occupier and we’ve collected 100% of rent due to us within seven days of the due date,” explains Shaldine Wang, CEO of Elite Commercial REIT’s manager.

The acquisition of the 58 properties will cost GBP212.5 million ($376.5 million). Wang said the transaction was structured to ensure certainty of completion. PartnerRe has committed to taking GBP89.4 million in units which would give it a 21% stake in Elite Commercial REIT. The REIT is also likely to raise GBP30 million in a preferential equity fund raising. PartnerRe has undertaken to provide a voluntary moratorium not to dispose of 100% of the new units it receives for six months after receipt, and at least 50% of the units for the next six months.

The acquisition properties are leased to the DWP and other UK government agencies. Post-acquisition, DWP will remain the primary tenant of the enlarged portfolio, followed by the Ministry of Defence, National Records of Scotland, and HM Courts and Tribunals Service.

The financing has been structured in such a way that the transaction is DPU accretive to the tune of 3.2% for the financial period from Feb 6 to June 30 on a pro forma basis and is NAV-neutral with NAV remaining at GBP0.61.

On Oct 21, Mapletree Logistics Trust announced it had upsized a private placement to 246.67 million, at $2.027 per unit. The placement is part of an equity fund raising exercise to raise around $650 million to partly finance the acquisition of 100% interest in seven properties in China, the remaining 50% interest in 15 properties in China that MLT already owns, one property in Malaysia and one in Vietnam. The cost of the properties is $1.04 billion, and including fees, the total cost is $1.09 billion. The transaction is likely to add 1.3% to DPU for FY2020 ended March on a pro forma basis, raising it to 8.25 cents while adding 6.6% to NAV, taking it to $1.28.