REIT Financial News - SUNTEC REIT PRIVATE PLACEMENT

SUNTEC REIT PRIVATE PLACEMENT – PRIVATE PLACEMENT OF 128,500,000 NEW UNITS IN SUNTEC REIT AT AN ISSUE PRICE OF S$1.19 PER NEW UNIT. See report.  


PRESS RELEASE - PRIVATE PLACEMENT UNITS IN SUNTEC REIT MORE THAN FIVE TIMES OVERSUBSCRIBED. See report.  



Author's Note
Amount of cash raised through this private placement exercise is S$149.0 million.  Assuming that the net proceeds from the Private Placement are fully used to repay debt facilities, Suntec REIT’s gearing is expected to fall from 34.3% to 31.5%.

From the latest quarterly earnings report in Sep 2009, the latest no. of units in issue is 1,628,774,865. The 128,500,000 of new units issued is about 7.89% of the existing units. Not to forget the 4th installment of 34,500,362 units just issued on Dec 9, there will be about 10% extra units altogether. Of course to prevent dilution of DPU for existing holders, there will be advanced distribution from 1 October 2009 to the day immediately prior to the New Units to be issued. The deferred units are also placed in a temporary stock counter (i.e. SuntecReit A), and their DPU end of this quarter will only be from their date of issue on Dec 9 to end of the quarter.

As there is no announcement of using this fund for acquisitions purpose, and with the new units and deferred units issued, unless there is significant increase in rental income of the existing properties, the DPU will probably be diluted in subsequent quarterly distributions. Assuming rental income remains stagnant from the last quarter, which has a DPU of about 2.92 cents, and taking in the 10% increase in new private placement units and deferred units, my rough estimate of subsequent DPU = 2.92/1.1 = 2.655 cents per unit.