Cambridge - Rights Issue to Raise Approx S$56.7 million for the Acquisition of Three Properties in Singapore

Cambridge - Rights Issue to Raise Approx S$56.7 million for the Acquisition of Three Properties in Singapore:

• Press Release
• Announcement

Key Points

• Proposed acquisition of three properties for an aggregate purchase consideration of S$116.8 million on a sale-and-leaseback basis to respective  vendors for lease terms of between 5 and 6 years with options to renew.
• CIT’s unitholders (“Unitholders”) are invited to participate in the Rights Issue to raise gross proceeds of approximately S$56.7 million, plus an opportunity to apply for Excess Rights Units.
• Rights Issue will be offered on a 1-for-8 basis (fractional entitlements to be    disregarded) at a price of S$0.429 per Rights Unit (the “Issue Price”) which is at a 15.0% discount to the closing price of S$0.505 per Unit on the SGX-ST on 10 March 2011 and a 13.7% discount to TERP.
• The Manager of CIT has undertaken to support the Rights Issue by Subscribing for the Rights Units represented by its Rights Entitlements.
• Expected benefits of the Acquisitions (as defined herein) and the Rights Issue (collectively, the “Transactions”) to Unitholders:
• Enhancing and improving the quality of CIT’s portfolio (the “Portfolio”) and increasing the size of the Portfolio thus generating economies of scale
• Pro forma DPU accretion and pro forma distribution yield of 10.1% for existing Unitholders
• Improving Portfolio and tenant trade sector diversification 
• Positive impact on the weighted average lease expiry and lease expiry profile
• Potential increase in liquidity through the Rights Issue
• Providing Unitholders with the pro-rata opportunity to participate in the growth of CIT at an Issue Price which is at a discount to the closing price per Unit

• The Rights Issue is expected to close on 6 April 2011 at 5.00 pm (for manual
  applications) and at 9.30 pm (for Electronic Applications).

Related Posts

• Cambridge issues and list 38,483,354 new units pursuant to the preferential offering - 18 NOV 2010
• Cambridge Notice of Advanced Distribution - 18 NOV 2010
• Cambridge to Launch Equity Fund Raising to raise up to S$50.4m for the acquisitions of 4 properties - 21 OCT 2010

First REIT completes acquisition of two Jakarta hospitals

First REIT completes acquisition of two Jakarta hospitals:

• Press Release
• Announcement

Key Points

• First Reit has completed the acquisition of two new healthcare properties in Indonesia – Mochtar Riady Comprehensive Cancer Centre (“MRCCC”) on 30 December 2010 and Siloam Hospitals Lippo Cikarang (“SHLC”) on 31 December 2010 (collectively, the “Acquisitions”).
• With the completion of the Acquisitions, First REIT’s portfolio has been enlarged and comprises 10 assets located in Indonesia and Singapore, valued in aggregate at approximately S$612.8 million as at 31 December 2010.
• Aims to achieve a portfolio size of S$1 billion in the next two to three years.
• First REIT‟s sponsor, Lippo Karawaci, Indonesia's largest listed property company by total assets, revenue and net profit, will be the master tenant of both the properties after completion.
• The conditional master lease agreements entered into with Lippo Karawaci in relation to MRCCC and SHLC on 8 November 2010 are for a 15 year lease term, with an option to renew for a further term of 15 years, subject to the renewal of the Properties‟ HGB titles.
• On 13 December 2010, the National Land Office of Indonesia extended MRCCC‟s HGB title (which was scheduled to expire on 27 August 2015) for a period of 20 years.
• Based on projection year 2011, the gearing level will stand at about 17%, which is significantly lower than the regulatory limit of 35%, allowing sufficient headroom for future accretive acquisitions.
• Based on projection year 2011, our gearing level will stand at about 17%, which is significantly lower than the regulatory limit of 35%, giving us sufficient headroom for future accretive acquisitions.

Related Posts

• First Reit rights issue - Use of proceeds for MRCCC acquisition
• Issue and listing of new units in first reit for the rights issue
• First Reit - results of the rights issue
• Extension of HGB title for Mochtar Riady Comprehensive Cancer Centre 
• First Reit - Lodgement and despatch of offer information statement - 6 DEC 2010
• First Reit - Notice of Rights Issue Books Closure Date
• The Expanded First Reit Post Rights Issue and Acquisitions
• First Reit - Follow up details of the proposed acquisition and rights issue - 10 NOV 2010 
• First Reit - proposed acquisitions and rights issue - 9 NOV 2010

First Reit rights issue - Use of proceeds for MRCCC acquisition

First Reit rights issue - Use of proceeds for MRCCC acquisition:

• Press Release

Key Points

• Out of the net proceeds of the Rights Issue of S$167.3 million, S$121.7 million has been used towards part financing the MRCCC Acquisition. Such use is in accordance with the stated use and in accordance with the percentage of the net proceeds of the Rights Issue allocated to such use. 
• The remainder of the cost of the MRCCC Acquisition will be financed by way of a transferable term loan of up to S$50.0 million for a term of four years from Oversea-Chinese Banking Corporation Limited.

Related Posts

• Issue and listing of new units in first reit for the rights issue
• First Reit - results of the rights issue
• First Reit - Lodgement and despatch of offer information statement - 6 DEC 2010
• First Reit - Notice of Rights Issue Books Closure Date
• The Expanded First Reit Post Rights Issue and Acquisitions
• First Reit - Follow up details of the proposed acquisition and rights issue - 10 NOV 2010
• First Reit - proposed acquisitions and rights issue - 9 NOV 2010 

Issue and listing of new units in first reit for the rights issue

Issue and listing of new units in first reit for the rights issue:

• Press Release

Key Points

• An aggregate of 345,664,382 Rights Units has been issued, bringing the total number of First REIT units (“Units”) in issue to 622,195,888 Units.
• The Rights Units will, upon allotment and issue, rank pari passu in all respects with the existing Units in issue as at the date of issue of the Rights Units, including the right to any distributions which may accrue for the period from 1 October 2010 to 31 December 2010 as well as all distributions thereafter.
• The Rights Units will be listed and quoted on the Main Board of Singapore Exchange Securities Trading Limited (the “SGX-ST”) with effect from 9.00 a.m. on 31 December 2010.

Author's Note
The newly issued units will also be eligible for the upcoming quarterly distribution from 1 Oct 2010 to 31 Dec 2010. The official completion of the 2 new acquisitions has not been announced. So far only the news of the Use of proceeds of rights issue for the MRCCC acquisition has been released. Since the earnings of the 2 new properties has not come in, the upcoming DPU is expected to be diluted. It will only be back to normal after the new properties start contributing their earnings.

Related Posts

• First Reit rights issue - Use of proceeds for MRCCC acquisition
• First Reit - results of the rights issue
• First Reit - Lodgement and despatch of offer information statement - 6 DEC 2010
• First Reit - Notice of Rights Issue Books Closure Date
• The Expanded First Reit Post Rights Issue and Acquisitions
• First Reit - Follow up details of the proposed acquisition and rights issue - 10 NOV 2010
• First Reit - proposed acquisitions and rights issue - 9 NOV 2010  

First Reit - results of the rights issue

First Reit - results of the rights issue:

• Press Release

Key Points

• Valid acceptances and excess applications for a total of 425,875,570 Right
  Units (as defined herein), representing approximately 123.2% of the total number of Rights Units available under the underwritten renounceable rights issue (the “Rights Issue”) of 345,664,382 new units in First REIT (“Rights Units”), were received as at the close of the Rights Issue on 22 December 2010.
• The Manager expects that the Rights Units will be issued on or about 30 December 2010.
• The Manager further expects that the Rights Units will be listed and quoted on the Main Board of the SGX-ST with effect from 9.00 a.m. on 31 December 2010.

Related Posts

• First Reit - Lodgement and despatch of offer information statement - 6 DEC 2010
• First Reit - Notice of Rights Issue Books Closure Date
• The Expanded First Reit Post Rights Issue and Acquisitions
• First Reit - Follow up details of the proposed acquisition and rights issue - 10 NOV 2010
• First Reit - proposed acquisitions and rights issue - 9 NOV 2010

K-Reit completes acquisition of a one-third interest in MBFC Towers 1 & 2 and Marina Bay Link Mall - 15 DEC 2010

i) Completion of acquisition of a one-third interest in Marina Bay Financial Centre Towers 1 & 2 and Marina Bay Link Mall and divestment of Keppel Towers and GE Tower;
ii) Use of proceeds from K-Reit Asia’s November 2009 rights issue.

• Press Release

Key Points

• The acquisition of a one-third interest in Marina Bay Financial Centre Towers 1 & 2 and Marina Bay Link Mall (including the assignment to K-REIT Asia of the loan made by Bayfront Development Pte. Ltd. to BFC Development Pte. Ltd.) (“BFC”) (the “MBFC Acquisition”) and the divestment of Keppel Towers and GE Tower (the “KTGE Divestment”, together with the MBFC Acquisition, the “Transactions”) has been completed on 15 DEC 2010.
• In relation to the use of proceeds from K-REIT Asia’s rights issue in November 2009 (the “Rights Issue”), the board of directors of the Manager, wishes to announce that to-date, out of the net proceeds of approximately S$616.0 million from the Rights Issue less the utilisation of approximately S$555.1 million made prior to this announcement, S$41.5 million has been used to partly finance the MBFC Acquisition.

Related Posts

• K-Reit's proposed acquisition of a one-third stake in MBFC phase 1 and proposed divestment of KTGE - 11 OCT 2010

SGX Shortens Time-To-Market for Secondary Fund Raising

SGX Shortens Time-To-Market for Secondary Fund Raising:

• Announcement 
• Rule Amendments for Main Board 
• Rule Amendments for Catalist Board

Key Points

• Singapore Exchange announced measures to facilitate and shorten time-to-market for secondary fund raising. These measures will take effect from 1 January 2011 with amendments to the securities listing rules applicable to both the Mainboard and Catalist board. 
• Temporary measures on fund raising were initiated in January and February 2009 to enable companies to raise capital efficiently under tight credit conditions during a global credit crunch. Following a public consultation and review conducted earlier this year, SGX will formalize a majority of the temporary measures in the interests of both shareholders and listed issuers.
• The measures that will be effective from 1 January 2011 are as follows:

1. Shortening the notice of books closure date from 10 to 5 clear market days;
2. Allowing issuers to undertake non-renounceable rights issue without specific shareholders' approval, provided the rights shares are priced at a discount not exceeding 10%;
3. Allowing issuers to issue scrip dividends without shareholders' approval, provided shareholders are given a cash option; and
4. Introducing a new practice note in the Listing Manual to provide guidance on sub-underwriting arrangements, including the need to seek specific shareholders' approval where sub-underwriting fees are paid to controlling shareholders and substantial shareholders.

Author's Note
With the new measures, rights issue can now be undertaken without specific shareholders' approval if rights shares are priced at a discount not exceeding 10%. The discount is with respect to the weighted average price for trades done on the Exchange for the full market day on which the rights issue is announced. Looking back at the rights issue exercises of Reits for the past couple of years, I cannot recall any with discount of less than 10%.

The pricing of rights shares is a very tricky business. Pricing it too low may result in the need to issue more new units in order to raise a certain amount of money, thereby diluting the per unit metrics such as distribution per unit and NAV per unit by a greater extent. Pricing it too high may discourage the existing share holders to subscribe to the rights shares. This may in turn result in the sponsor of the Reit having to take up the excess rights.

From the perspective of the Reit, it is more favourable for the price of rights shares to be as high as possible as more money can be raised for the same number of new units issued. Pricing it too low may have a long term impact on the per unit metrics of the Reit, as the Reit will have less money to make use of to bring up the per unit metrics.

There has been a number of successful private placement exercises with discounts of less than 10%.  These private placement exercises generally do not have much impact on the per unit metrics as the percentage increase in share base is very low. The Reit can thus raised the money for acquisition of new properties without causing too much dilution of the per unit metrics. Only thing about the private placement exercises is that unlike the rights issue, they are not open to all the existing share holders. With the new measure, it may be possible for the Reit to conduct more regular rights issue with discounts of less than 10%, and at a smaller percentage increase in share base similar to the private placement exercises.

First Reit - Lodgement and despatch of offer information statement - 6 DEC 2010

First Reit - Lodgement and despatch of offer information statement.

• Announcement 
• Offer Information Statement (OIS)
• Guidelines

Key Points

• The manager of First REIT has today lodged with the MAS the offer information statement (“Offer Information Statement”) in relation to the issue of 345,664,382 new units in First REIT on a fully underwritten and renounceable basis to Eligible Unitholders on a pro rata basis of five Rights Units for every four existing Units held as at 5.00 p.m. on 3 December 2010 at the issue price of S$0.50 per Rights Unit, fractional entitlements to be disregarded, to raise gross proceeds of approximately S$172.8 million.
• The Offer Information Statement is available on the website of the MAS at www.mas.gov.sg and will be despatched on 8 December 2010 to Eligible Unitholders.

Author's Note
For holders of the rights, do take note of the IMPORTANT DATES AND TIMES as indicated in the guidelines and OIS: 

Last date and time for trading of Rights Entitlements	16 December 2010 at 5.00 p.m.
Last date and time for acceptance of Rights Entitlements and payment for Right Units	22 December 2010 at 5.00 p.m. (9.30 p.m. for Electronic Applications through ATMs of Participating Banks)
Last date and time for application and payment for Excess Rights Units	22 December 2010 at 5.00 p.m. (9.30 p.m. for Electronic Applications through ATMs of Participating Banks)

The Offer Information Statement can also be found in the MAS Opera site. Look under the category Collective Investment Scheme Offers, and click on the Latest link.

Related Posts

• First Reit - Notice of Rights Issue Books Closure Date
• The Expanded First Reit Post Rights Issue and Acquisitions
• First Reit - Follow up details of the proposed acquisition and rights issue - 10 NOV 2010
• First Reit - proposed acquisitions and rights issue - 9 NOV 2010
• All about REIT - Rights Issue Part 2: What happens during a Rights Issue 
• All about REIT - Rights Issue Part 1: Terms and Definition

First Reit - Notice of Rights Issue Books Closure Date

First Reit - Notice of Rights Issue Books Closure Date.

Press Release

This is further to the announcement dated 10 November 2010 about the rights issue exercise and acquisition of 2 properties in Indonesia.

Key Points

• The book closure date will be on 3 December 2010 at 5.00 p.m. for the purpose of determining the provisional allotments of Rights Units of Eligible Unitholders under the Rights Issue.
• Eligible Unitholders whose securities accounts with CDP are credited with Units on 3 December 2010 at 5.00 p.m. will be entitled to participate in the Rights Issue.
• The Rights Issue exercise is subject to approval by Unitholders at the extraordinary general meeting of Unitholders to be held on Monday, 29 November 2010.

Related Posts

• The Expanded First Reit Post Rights Issue and Acquisitions
• First Reit - Follow up details of the proposed acquisition and rights issue - 10 NOV 2010
• First Reit - proposed acquisitions and rights issue - 9 NOV 2010

Cambridge issues and list 38,483,354 new units pursuant to the preferential offering - 18 NOV 2010

Cambridge issues and list 38,483,354 new units pursuant to the preferential offering. See press release.

Key Points

• This announcement is in relation to CIT’s equity fund raising comprising:
  
  • The private placement of 56,498,000 new units in CIT at an issue price of  S$0.531 per Placement Unit to raise gross proceeds of approximately S$30.0 million.
  • The pro-rata and non-renounceable preferential offering of 38,483,354 new units in CIT on the basis of one Preferential Unit for every twenty-five existing units in CIT held by Entitled Unitholders1 as at 5.00 p.m. on 29 October 2010, fractions of a Preferential Unit to be disregarded, at an issue price of S$0.531 per Preferential Unit to raise gross proceeds of approximately S$20.4 million.
• The Manager wishes to announce that the issuance of the Preferential Units has been completed on 18 Nov 2010. With the issuance of the Preferential Units, the total number of Units in issue has increased to 1,057,065,216 Units.

Related Posts

• Cambridge Notice of Advanced Distribution - 18 NOV 2010
• Cambridge to Launch Equity Fund Raising to raise up to S$50.4m for the acquisitions of 4 properties - 21 OCT 2010

Cambridge Notice of Advanced Distribution - 18 NOV 2010

Cambridge Notice of Advanced Distribution. See press release.

This is a follow up of the earlier announcement dated 21 October 2010 relating to the Equity Fund Raising and acquisitions.

Key Points

• Distribution of the distributable income for the period from 1 October
  2010 to 17 November 2010 in advance.
• Advanced Distribution of 0.627 cents per Unit in cash will be paid on 6 December 2010.
• Unitholders whose securities accounts with The Central Depository (Pte) Limited were credited with Units as at 5.00 p.m. on 29 October 2010 will be entitled to the Advanced Distribution.

Related Posts

• Cambridge issues and list 38,483,354 new units pursuant to the preferential offering - 18 NOV 2010
• Cambridge to Launch Equity Fund Raising to raise up to S$50.4m for the acquisitions of 4 properties - 21 OCT 2010

The Expanded First Reit Post Rights Issue and Acquisitions

First Reit has announced its proposed acquisitions of 2 Jakarta hospitals, and 5 for 4 rights issue on 9 Nov 2010, followed by more details on 11 Nov 2010. I have come across a couple of blog articles with the analysis of the rights issue and acquisitions in details, and have provided the links under the "Related Links" section below. I shall not be going through the numbers in details here, but will be taking a broader view of the whole exercise and also some additional points. Before that, for those who are new to First Reit, following are some background information.

Background
First Reit is a healthcare reit which has a portfolio of mainly hospitals and a hotel in Indonesia. It also owns some nursing homes and a hospital in Singapore. Its sponsor is the Lippo Group, which also co-sponsored the LippoMaple Indonesia Trust, an Indonesian retail reit, with Mapletree Pte Ltd, a fully owned subsidiary of Temasek Holdings. Following is a brief description of the Lippo Group:

"The Lippo Group is a major Indonesian conglomerate founded by its Chairman, Dr. Mochtar Riady in the 1950s. It consists of private and public companies in China mainland, Hong Kong and Macau; Indonesia, Philippines, Singapore and South Korea with US$11 billion in assets. Lippo Group has over 15 public-listed companies in different parts of Asia including Hong Kong, Indonesia and Singapore."

Developments Since 2009
First Reit has been rather quiet for the past 2 years. Other than some asset enhancement works, it has not undertaken any major moves such as acquisition of new properties that would have made significant impact on its DPU. Thus its DPU has been rather stable from quarter to quarter around 1.9 cents since 2009. Its stock price has also not been moving up as quickly as most of the other s-reits, and because of that its dividend yield has consistently been one of the top among the s-reits. Recently its share price has seen a very impressive surge, closing at a all time high of 0.980 cents on 8 Nov 2010, just a day before the release of the acquisitions and rights issue announcement. On 9 Nov 2010, the reit announced the proposed acquisitions of 2 Jakarta hospitals as well as a 5 for 4 rights issue. The details can be found under the "Related Posts" below.

What is the effect of the acquisition and rights exercise?
At first glance the whole exercise does not seem to be very favourable for the reit. The 5 for 4 rights issue is going to more than double the share base, and at a relatively cheap price of S$0.50. The gearing as at 30 Sep 2010 was 16.5%, which is at a very low level. Doesn't it make more sense to finance the acquisitions primarily by debt, with a smaller scale rights issue or private placement that is going to have less impact on the share base?

If we take a closer look at the total asset value of the reit as at 30 Sep 2010, we will find that there is very little room for the reit to borrow much without hitting the gearing limit. The total asset is only S$346.1m. To my knowledge, at the time of this writing First Reit does not having a rating by Fitch, Moody's or S&P, which means that it can only gear up to 35%. So financing primarily by debt will leave the reit with less choices as acquisition targets, as it can only look for acquisitions of smaller scale. Furthermore, even a smaller scale acquisition can easily drive up its gearing close to the gearing limit because of its low asset base.

The management may have wanted to make use of the recent positive reaction to equity raising exercises like rights issue, private placement and IPOs to undertake a larger scale equity raising, so that it will pave the way for future expansion plans. According to the press release on 11 Nov 2010. post acquisition and rights issue, the projected gearing is still at a low level of 17.25%. Though the gearing has not changed much from 16.5% before the exercise, the asset base is going to be almost doubled to S$603.4m, which is going to make a difference to the absolute amount of debt the reit can incur before hitting the gearing limit. This will allow the reit to have more choices to make further acquisitions, thus helping it to achieve its target of having a portfolio size of S$1 billion in the next two to three years.

DPU Post Exercise
The projected annual DPU post exercise is 6.40 Singapore cents. Based on the DPU of 1.94 Singapore cents for the quarter ending 30 Sep 2010, the annualized DPU before the exercise is 7.76 Singapore cents. Whichever way you may want to calculate and compare the yield before and after the exercise, whether it is by TERP or by using the last closing price before announcement of the rights issue, the absolute amount of distribution you are going to received per unit is going to be reduced. So for existing unit holders you must keep a close tab on the schedule for rights issue, and not forget to either sell the rights, exercise the rights, or partially sell and partially exercise the rights before the deadline in order not to lose out on anything.

Related Links

• http://singaporeanstocksinvestor.blogspot.com/2010/11/first-reit-rights-issue.html
• http://www.investmentmoats.com/money-management/reit/first-reit-announces-acquisition-and-rights-issue/

Related Posts

• First Reit - Follow up details of the proposed acquisition and rights issue - 10 NOV 2010
• First Reit - proposed acquisitions and rights issue - 9 NOV 2010
• All about REIT - Rights Issue Part 2: What happens during a Rights Issue 
• All about REIT - Rights Issue Part 1: Terms and Definition

First Reit - Follow up details of the proposed acquisition and rights issue - 10 NOV 2010

Follow up details of the proposed acquisition and rights issue:

• Press Release
• Presentation Slides
• Circular 1
• Circular 2

Key Points

• Distribution in projection year 2011 is expected to rise from 8.57% to 9.14% following the acquisition of two new healthcare properties in Indonesia.
• This is based on a forecast annualised DPU of 6.40 Singapore cents for the full financial year ending 31 December 2011, in relation to its enlarged portfolio and financing through a combination of the underwritten renounceable rights issue of 345,664,382 new Units at an issue price of S$0.50 per Rights Unit and bank loan.
• Upon completion of the Acquisitions, First REIT’s aggregate leverage will also be lowered from 18.60% to 17.25% for the Projection Year 2011.
• On completion of the Acquisitions, the conditional master lease agreements entered into with Lippo in relation to the Properties will commence for a 15 year lease term.
• Rental income of both Properties comprise a base rent component which is payable quarterly in advance, and subject to a stepped up increase every year thereafter at a rate equal to 2 times of the percentage increase of Singapore’s Consumer Price Index for the preceding calendar year; as well as a variable rent component. 

Related Posts

• First Reit - proposed acquisitions and rights issue - 9 NOV 2010

First Reit - proposed acquisitions and rights issue - 9 NOV 2010

First Reit - proposed acquisitions and rights issue & receipt of approval in-principle for the listing of new units:

• Press Release
• Announcements
• Presentation Slides

Key Points

• First Reit to acquire two Jakarta hospitals for a purchase consideration of S$205.5 million to be funded partially by Rights Issue of 345,664,382 new units.
• The Mochtar Riady Comprehensive Cancer Centre (“MRCCC”) is being acquired from Wincatch Limited, an unrelated third party, for S$170.5 million, and Siloam Hospitals Lippo Cikarang (“SHLC”) is being acquired from the sponsor of First REIT, PT Lippo Karawaci Tbk, for S$35.0 million.
• The respective purchase prices of MRCCC and SHLC represent an attractive discount of 19.7% and 13.8% respectively to the average of the properties' latest independent valuations.
• The Acquisitions will increase First REIT‟s assets by 74.3% to S$603.4 million.
• The rights issue will raise approximately S$172.8 million in gross proceeds.
• The rights issue will be on a pro rata basis of five Rights Units for every four existing Units, at S$0.50 each (fractional entitlements to be  disregarded).  
• The Rights Issue books closure date will be at 5.00 p.m. on 3 December 2010.
• The Issue Price represents a discount of 47.4% to the closing price of S$0.95 per Unit on 4 November 2010 (the “Closing Price”).

Author's Note

First Reit has finally announced new acquisitions after a long wait, and a very significant one relatively to its existing assets. For quite sometime the Reit has been rather quiet, with the DPU being relatively constant from quarter to quarter. However, there has been quite a noticeable surge in its share price recently, which closed at a all time high of 0.980 cents on 8 Nov 2010, just a day before the release of this announcement.

Cambridge to Launch Equity Fund Raising to raise up to S$50.4m for the acquisitions of 4 properties - 21 OCT 2010

Launch of Equity Fund Raising to raise up to S$50.4 m for the acquisitions of 4 properties:

• Press Release
• Presentation Slides

Key Points

• Acquisition of 25 Tai Seng Avenue, 511 & 513 Yishun Industrial Park a and potential acquisitions of two properties in the western part of singapore.
• Equity fund raising to raise up to S$50.4 million.
• Equity Fund Raising to comprise:  
• Private Placement of 56,498,000 new units in Cambridge Industrial Trust to raise gross proceeds of approximately S$30.0 million
• Preferential Offering of up to 38,483,354 new units in CIT to raise gross proceeds of up to approximately S$20.4 million 
• New units to be offered at a price of S$0.531 for the Private Placement and S$0.531 for the Preferential Offering. 
• Retail Offering to be made on the basis of each unitholder having a preferential offer of one (1)  Preferential Unit for every twenty five (25) existing units in CIT held by entitled unitholders as at 5.00 p.m. on 29 October 2010, plus the opportunity to apply for additional units.
• Net proceeds to be used to part‐finance two (2) announced properties and two (2) potential acquisitions, all located in Singapore, with aggregate cost of approximately S$74.3 million.  
• Expected benefits to CIT from the addition of these properties:
• Improvement in asset quality through an enlarged portfolio; 
• Improved portfolio and tenant diversification; and  
• Positive impact on weighted average lease tenure and weighted average lease expiry 
• Post‐completion of the Equity Fund Raising, CIT’s gearing level is estimated to fall from 39.2% to 38.6%, strengthening CIT’s capital structure. 

REIT Financial News - 9 SEP 2010: Notice of rights issue books closure date for AIMSAMPIReit

NOTICE OF RIGHTS ISSUE BOOKS CLOSURE DATE for AIMSAMPIReit. See press release.

Key Points

• Eligible Unitholders will receive their Rights Entitlements on a basis of seven (7) Rights Units for every twenty (20) existing Units held by each Eligible Unitholder as at the Rights Issue Books Closure Date. 
• Important dates and times in respect of the Rights Issue:

Event	Date and Time
Last day of “cum-rights” trading for the Rights Issue	15 September 2010
First day of “ex-rights” trading for the Rights Issue	16 September 2010
Rights Issue Books Closure Date	20 September 2010 at 5 p.m.
Commencement of Rights Entitlement trading period	23 September 2010
Close of Rights Entitlement trading period	1 October 2010
Last date for acceptance of and payment for Rights Units	7 October 2010
Completion of the issue of Rights Units	14 October 2010
Commencement of trading of the Rights Units on the	15 October 2010

 

Author's Note
This follows the previous announcement on 13 AUG 2010 about the
proposed acquisition, new debt facility and fully underwritten renounceable rights issue by AIMSAMPIReit.

REIT Financial News - 13 AUG 2010: AIMS AMP Reit - Announcement of Acquisition and Private Placement

AIMS AMP Capital Industrial REIT announces proposed acquisition, new debt facility and fully underwritten renounceable rights issue. See:

• Press Release
• Report
• Presentation Slides

Key Points

• Proposed acquisition of a high-quality industrial property at 27 Penjuru Lane Singapore 609195 for S$161.0 million.
• New debt facility of S$280.0 million.
• Fully underwritten renounceable 7 for 20 rights issue to raise S$79.6 million.
• The Rights Issue Books Closure Date which is expected to be 5.00 p.m. on 20 September 2010.
• The Rights Units will be issued at a price of S$0.155 per Rights Unit, which is a discount of 32.6% to the closing price of S$0.230 per unit on 19 August 2010 and which is a discount of 26.5% to the theoretical ex-rights price (“TERP”) of S$0.211.
• The Manager expects to raise gross proceeds of S$79.6 million, of which:



• S$64.5 million will be used to part satisfy the total cash cost of the Acquisition.
• S$4.8 million will be used to pay for underwriting and selling commissions and professional and other fees and expenses.
• S$10.3 million will be used to pay for debt related costs and for general corporate and working capital purposes.



• As a demonstration of their support and commitment to the Trust, the Sponsors, AIMS Financial Group and AMP Capital Investors (Luxembourg No. 4) S.A.R.L., have committed to subscribe for their pro rata rights entitlements of 39,286,080 Rights Units and 82,500,000 Rights Units respectively.

REIT Financial News - 20 AUG 2010: Ascott REIT buying 28 serviced residences for S$970m

i) PROPOSED ACQUISITIONS AND DIVESTMENT
ii) APPROVAL IN-PRINCIPLE FOR THE LISTING OF NEW UNITS
See:

• Press Release
• Report
• Presentation Slides

Key Points

• Acquiring 28 serviced residences from its parent company, The Ascott, for S$969.6 million. 
• With the acquisition, its assets will double to about S$2.85 billion.
• it will become the sixth largest REIT in Singapore in terms of assets after its acquisition.
• Of the 28 properties to be acquired, 26 are in Europe, 1 in Singapore, and 1 in Vietnam (Hanoi).
• The Trust expects its annualised distribution per unit to rise some 4.8 per cent to 7.74 cents in its 2011 financial year. 
• It will also be selling a serviced apartment, Ascott Beijing, to its parent for S$214 million. 
• The divestment is 66 per cent above the property's valuation of S$181.8 million as at June 30 and will realise a gain of approximately S$106.2 million.
• To part finance the acquisitions, the Reit intends to raise approximately S$560.6 million through an equity fund raising which will comprise a non-renounceable preferential offering to existing unitholders and a private placement. 
• The proposed equity fund raising is expected to increase the Reit's free float by approximately 73% from S$385.3 million to S$665.3 million.
  
   
  

All about REIT - Rights Issue Part 2: What happens during a Rights Issue

Previously I have covered some important terms and definition with regards to Rights Issue in All about REIT - Rights Issue Part 1: Terms and Definition. In this article I shall touch on things that happen during a rights issue. The information here is primarily based on the rights issues that took place for the REITs in 2009.

Entitlement to the Rights
Following the announcement of rights issue of a REIT there will be a period of time in which the REIT units will be trading CR (Cum Rights). Unit holders who hold on to the units till the last day of CR will be entitled to the rights. The units will enter the XR (Ex Rights) period after the last day of CR. You are still entitled to the rights if you sell your units from the first day of XR.

Issue of Rights
If you are entitled to the rights, the rights will be credited to your CDP account, usually a few days after the end of CR. The number of rights issued will be based on the ratio of rights issued per unit. A 1 for 1 rights issue means you will get one right per share, and a 1 for 2 rights issue means you will get 1 right for every 2 shares you have. The best way to check whether your entitled rights have been credited into your CDP account will be through the online CDP access. The name of the rights will normally be the name of the parent unit followed by a "R".
Example:
Starhill Global R for rights of Starhill Global Reit.

Rights Issue Circular and Application Form
Now even if you do not actively follow the SGX announcements, you should still get to know that you are entitled to the rights for the units you owned when CDP send you the Circular about the Rights Issue and Application Form to subscribe to the new units. In the application form, the number of rights you have been issued will be stated. You should take note of the important dates mentioned in the circular, especially the dead line to subscribe to the new units, and trading period for the rights.

Decide what to do with the rights
You should make careful decision on what to do with the rights. If you want to subscribe to the new units, you should take note of the deadline for you to do so and try not to miss it. If you want to sell the rights you should take note of the trading period for the rights. Of course you can also sell some of the rights and subscribe to the new units using the remaining rights. Now it will be unwise to totally do nothing about the rights. You will lose out in having your existing units diluted in terms of yield and other per unit financial figures such as NAV per unit.

Trading of Rights
As mentioned above, you should take note of the trading period of the rights if you intend to sell the rights fully or partially. During the trading period, a temporary counter will be created in SGX, and the rights can be sold or bought just like normal shares through your brokerage trading account.The counter name should be the same as the name of the rights in your CDP account.

Sometimes there may be additional counters for trading of odd lots of the rights, which is possible based on certain combination of rights to units ratio. Example, for a 1 for 2 rights issue, every board lot of 1000 units will be issued with 500 rights. So there will normally be an additional counter for trading of rights in board lot of 500 rights. The counter name will usually be the name of the parent unit followed by a "R", and the number of rights per board lot.
Example:
Starhill Global R500 for rights of Starhill Global Reit in board lot of 500 rights.

Subscribing to the New Units
There are 2 possible ways to subscribe to the new units, by application form or by ATM.

As mentioned above, the application form is mailed to the rights owner along with the rights issue circular. To subscribe via the application form, you need to indicate in the form how many new units you wish to subscribe to based on the number of rights you have. If you wish to subscribe to additional new units based on the excess rights, you should also indicate this in the form. For payment you need to use a Cashier's Order or Bank Draft, the amount of which should be the total cost of the new units you are subscribing to, inclusive of the cost of additional units based on excess rights. Note that payment by cheque is not allowed.

Personally I find that subscribing using the application form is highly inconvenient, especially when you have to visit the bank to purchase the Cashier's Order. You must also make sure you mail back the form and Cashier's Order early so as not to miss the dead line. Application by ATM is much more convenient. Similar to the application form, you need to indicate the number of new units you wish to subscribe to and any additional units via excess rights. The cost to subscribe to the new units will be deducted from your bank account, and you will get a receipt indicating the details of the subscription. Note that you should check the circular for the participating banks for subscription via ATM. Although most of the time the 3 local banks (DBS, UOB, OCBC) are included, you should not assume this to be true all the time. I was caught by surprise once when DBS was not included as a participating bank for the rights issue exercise of a company (not a REIT), and it was very near the deadline when I realized it.

Balloting Process for Over Subscription
One or two days after the deadline to subscribe to the new units, the REIT will usually make an announcement in SGX about how many valid subscriptions have been received, as well as the number of subscriptions via excess rights. There will be over subscription when the number of subscriptions via excess rights exceed the actual number of excess rights available. This will bring about a balloting process to allocate the new units subscribed via the excess rights. Those with odd lots of the new units will have priority during the balloting to top it up to full lots. For example, for a 1 for 2 rights issue, someone originally with 1000 units will end up with 500 new units. If this person apply for 500 additional new units via excess rights, the chances of getting it will be higher.

Results of Rights Issue
For new units you have subscribed to based on your rights entitlement, these new units will definitely be allocated to you. For those applied via the excess rights, you will also definitely get them if there is no oversubscription. If there is oversubscription, whether you will get the new units will depend on the balloting process mentioned above. Normally the Rights Issue Circular will indicate the date in which the new units will be credited into the CDP account. You should be able to check whether the new units have been credited into your CDP account online via www.cdp.com.sg one day later.

Refunding for Unsuccessful Subscription
If you have unsuccessfully subscribed for additional new units via excess rights, the amount you have paid for the application will be refunded to your bank account one day to a few days later.

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• All about REIT - Rights Issue Part 1: Terms and Definition
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All about REIT - Rights Issue Part 1: Terms and Definition

REITs normally raise funds for its acquisitions by debts. However, there are certain circumstances that will restrict a REIT from borrowing further. One situation will be the 35% (60% with corporate rating) limit on its gearing (see All About REIT - The Basics Part 4: Gearing Limit) has been reached, such that its debt level cannot be further increased. Sometimes the REIT may be trying to refinance an existing loan, and the refinancing terms may not be favourable and higher interest cost may be incurred. This is especially so during the period of credit crunch after the collapse of Lehman in 2008. Under these circumstances, the REIT may have to raise new funds by equity instead. Rights issue is one way in which a REIT can raise funds by equity. A straight forward description of rights issue is as follows:

The company issues new shares to existing shareholders. Shareholders can take up the new share at a price, or can give up the entitlement.

The above is a very simplistic view of the rights issue, but it covers the main idea. In an actual situation, the company issues rights to the existing shareholders first. These rights are actually entitlements to subscribe to the new shares to be issued. The rights may have a market value and may be traded within a specific window period. The owners of the rights can choose to subscribe to the new shares or give up their entitlement.

In 2009, quite a number of REITs have gone on the path of rights issue to raise funds and strengthen their balance sheets, examples being A-REIT, CapitaMall Trust, CapitaCommercial Trust, Frasers Commercial Trust, K-Reit, Fortune Reit, AIMSAMPI Reit, and Starhill Global Reit.

Following are some terms and information related to rights issues:

Rights to Share Ratio
The number of rights issued per existing share. Example a 1 for 1 rights issue means each existing unit will be issued with one right, which in turn entitles it to one new share. Following the issue of the new shares, the total outstanding shares will be doubled in this case. Another example is FCOT's 3 for 1 rights issue in 2009. 3 new shares has been issued for each existing share, thereby increasing the total outstanding shares by 4 times.

Renounceable Rights
Usually we will see this term being mentioned in the circulars about the rights issue. Renounceable rights means that the rights are transferable and can be traded off if the unit holder does not wish to subscribe to the new shares. The rights can also be non-renounceable, meaning it is non transferable and hence cannot be traded. Most, if not all the rights issue of the REITs in 2009 involved renounceable rights.

Trading of Rights
This applies to the renounceable rights. Usually there will be a window period of 1 to 2 weeks for the rights to be traded in the stock exchange. A temporary counter for the rights will be created for this purpose. Unit holders who do not wish to subscribe to the new shares can sell of their rights for a value determined by the market. After this window period, the unit holder can only choose to subscribe to the new shares, or give up the entitlement.

Subscription price of the new share
The price the owner of the rights need to pay to subscribe for each new share. Normally this will be at a discount to the last traded price of the Reit before the announcement of the rights issue, or to the average share price of the last few days. In the earlier part of 2009 when market is still uncertain, the discount given was rather large, probably to encourage more unit holders to take up the new shares.

Excess Rights
More often than not, some may give up the entitlement to the new shares although they hold the rights. These rights then become the excess rights. Those who choose to subscribe to the new shares with the rights they own can also opt to subscribe to new shares with these excess rights. If the number of applications to the excess rights exceeds the available excess rights, some kind of balloting process will kick in. Usually those who have odd lots of the rights will have priority. Example if you have 999 rights, you will have a high chance to get the 1 excess right for you to make up a full lot of new share.

Pro Forma Figures
The Pro Forma Figures is a set of important figures that are usually presented in the circulars about the rights issue. The pro forma figures are estimated values of important financial figures such as yield, gearing, NAV, revenue, net profit, etc, assuming the rights issue has been carried out at an earlier date, usually 1 year or 6 months ago. The past financial figures will be adjusted accordingly to factor in the effect of the rights issue. It will factor in the reduction in interest payment for debts if the funds raised has been used to pay up loans. If the rights issue comes together with proposed acquisitions of new properties, then the increase in distributable income from these new properties will be factored in. Most importantly, the increase in total outstanding shares will be factored in when calculating the figures such as yield and NAV. The pro forma figures is an important set of figures to look at if you want to estimate the diluting effect of the rights issue. The yield may decrease in the short term due to the increase in the share base, but the pro forma figures will give an idea of yield in the middle to long term after factoring in payment of debts and income from new acquisitions. However, do take note that these are estimated figures, and the actual figures may turn out better or worse.

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• All about REIT - Rights Issue Part 2: What happens during a Rights Issue
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