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ESR-REIT proposes equity fund raising to raise gross proceeds of up to $150 mil to finance property acquisition, AEIs

Stanislaus Jude Chan 
17/06/2019, 11:46am

SINGAPORE (June 17): The manager of ESR-REIT has proposed an equity fund raising exercise to raise gross proceeds of up to $150 million.

Around $44.4 million, or 29.6% of the gross proceeds of the equity fund raising, will be used to fully finance ESR-REIT's acquisition of a property at 48 Pandan Road.

A further $56.8 million, or 37.9% of the gross proceeds of the equity fund raising, will be used for ESR-REIT’s debt repayment in relation to the proposed acquisition as well as proposed asset enhancement initiatives (AEIs).

First, ESR-REIT will offer 195 million new units at an issue price of between 51.5 cents and 52.5 cents in a private placement to institutional and other investors to raise gross proceeds of at least $75 million.

The issue price represents a discount of between 6.5% and 8.3% to the volume weighted average price (VWAP) of 56.16 cents per unit that ESR-REIT traded at from the preceding market day on June 14 up to the signing of the placement agreement on June 17.

Including an upsize option, the private placement is expected to raise total gross proceeds of up to $100 million.

The issue price for the private placement will be determined by the manager and the joint global coordinators and bookrunners – Citigroup Global Markets Singapore and RHB Securities Singapore – following a book-building process.

At the same time, ESR-REIT is also planning a non-renounceable preferential offering of new units to existing unitholders to raise gross proceeds of up to $75 million.

The structure and timing of the preferential offering, which is not expected to be underwritten, have not yet been determined. Details will be announced later.

The manager says the preferential offering issue price will not be at more than 10% discount to the VWAP for trades done on the full market day on which the preferential offering is announced, or for the preceding market day up to the time it is announced.

ESR-REIT’s sponsor, ESR Cayman, has said it will provide an undertaking to the manager to apply for any new preferential offering units that remain unsubscribed. ESR Cayman currently owns a 9.4% stake in ESR-REIT.

More details in https://www.theedgesingapore.com/news/eq...il-finance

Tycoon also selling REITs

ESR
https://links.sgx.com/1.0.0/corporate-an....final.pdf

Sabana
https://links.sgx.com/1.0.0/corporate-an...47c1ade7a4

IREIT - cleared
https://links.sgx.com/1.0.0/corporate-an...0f39388e0c

(08-04-2020, 09:26 AM)opmi Wrote: [ -> ]Tycoon also selling REITs

ESR
https://links.sgx.com/1.0.0/corporate-an....final.pdf

Sabana
https://links.sgx.com/1.0.0/corporate-an...47c1ade7a4

IREIT - cleared
https://links.sgx.com/1.0.0/corporate-an...0f39388e0c

Interesting. Big sale seems to have been IREIT on 6th April, 115 million shares at 0.49c per share to raise $56m+. ESR 31.884 million shares to raise $7.865m on 6th April, Sabana 5.84 million shares to raise $1.257m, before 3rd April, in 2 deals. All three counters down today after bouncing up yesterday. IREIT had bounced a lot, closing at 62c per share yesterday; now at 58.5c. Heavy trading today in ESR, so maybe this is continuing?

Selling to meet other commitments? Raising cash for rights issues (haven't heard of any, but a lot of REITS had rights issues after 2008 crash)? Just pessimistic on sector? 

When you are a billionaire and need to sell shares for kacang puteh, something is wrong..

First two is by market transaction, while last one (IREIT) is by off-market (married deals). Wonder who is the buyer for IREIT.

For IREIT, seems that Tong Jinquan sold to Arvind Tiku and CSE off-market.
At the same time, Tong Jinquan also sold some on-market.

I find SGX PDF filings very confusing. Can't they just summarize in a HTML table form like SEHK.
Also, the format is totally random. Some people report price per share and number of shares. Some report total number of shares and total value. Some express value in "XXX million". Some express in just numbers. Its like some half-a**ed kind of computerization.

Regarding IREIT, out of the 56m SGD off market disposal from Tong Jinquan, 38.7m was bought by Tikehau Capital the manager.
https://links.sgx.com/1.0.0/corporate-an..._final.pdf
So I think that's not really a bad sign. I like to see managers eat their own dog food.

The remaining 17.2m was bought by Arvind Tiku under AT investments.
https://links.sgx.com/1.0.0/corporate-an..._final.pdf

Besides these, Mr Tong sold another 6.5m SGD on-market in the last one month.

At least that's what I can make out of the maze of SGX PDF filings.

PROPOSED MERGER OF ESR-REIT AND ARA LOGOS LOGISTICS TRUST BY WAY OF A TRUST SCHEME OF ARRANGEMENT – REVISION OF SCHEME CONSIDERATION

https://links.sgx.com/FileOpen/ESR-REIT%...eID=698411

Improved offer for ARA Logos unit holders.

I hold units in both trusts. Both trusts have shown a trend of reducing dividends per unit over many years. I now tend to treat them more as a trading opportunity than as a steady source of dividends in retirement, which was my original intent. Relatively simple - buy some when the market is bad and the yield is high, sell some when the market is stronger and the yield is relatively low, while applying for rights and excess rights when there is a heavily discounted rights issue.

(22-01-2022, 05:40 PM)Dosser Wrote: [ -> ]I hold units in both trusts. Both trusts have shown a trend of reducing dividends per unit over many years. I now tend to treat them more as a trading opportunity than as a steady source of dividends in retirement, which was my original intent. Relatively simple - buy some when the market is bad and the yield is high, sell some when the market is stronger and the yield is relatively low, while applying for rights and excess rights when there is a heavily discounted rights issue.

Hi Dosser,

I guess if you look at both trusts, they share a common issue. That is, changing shareholders at sponsor level throughout the years. Example ARA Logos Trust. Started with CWT, HNA, ARA and then ARA Logos etc. ESR Reit also evolved a few times from the previous Cambridge Industrial Reit.

With an unstable shareholder structure at sponsor level, it flows down to the trust level and you have made your observations on reducing DPU throughout the years. This also contributed to the volatility of the trusts, making them easy targets for traders who wished to benefit from their unit price movements.

I guess smaller trusts listed on SGX should not be treated as buy and hold income instruments. Rather, they have to be classified as higher risk yield plays, similar to high yield bonds. While there is no right or wrong answers, your approach looks sound to me, but it requires a more active approach in managing those trusts. Which is not for everyone, especially those who prefer a more passive approach.

(23-01-2022, 11:02 AM)ghchua Wrote: [ -> ]

(22-01-2022, 05:40 PM)Dosser Wrote: [ -> ]I hold units in both trusts. Both trusts have shown a trend of reducing dividends per unit over many years. I now tend to treat them more as a trading opportunity than as a steady source of dividends in retirement, which was my original intent. Relatively simple - buy some when the market is bad and the yield is high, sell some when the market is stronger and the yield is relatively low, while applying for rights and excess rights when there is a heavily discounted rights issue.

Hi Dosser,

I guess if you look at both trusts, they share a common issue. That is, changing shareholders at sponsor level throughout the years. Example ARA Logos Trust. Started with CWT, HNA, ARA and then ARA Logos etc. ESR Reit also evolved a few times from the previous Cambridge Industrial Reit.

With an unstable shareholder structure at sponsor level, it flows down to the trust level and you have made your observations on reducing DPU throughout the years. This also contributed to the volatility of the trusts, making them easy targets for traders who wished to benefit from their unit price movements.

I guess smaller trusts listed on SGX should not be treated as buy and hold income instruments. Rather, they have to be classified as higher risk yield plays, similar to high yield bonds. While there is no right or wrong answers, your approach looks sound to me, but it requires a more active approach in managing those trusts. Which is not for everyone, especially those who prefer a more passive approach.

ghchua,

I agree with your analysis. However, the market moves in broad cycles so the need for monitoring and trading is very limited. I will check for changes in DPU and rights issues via the company statements on SGX web site. The dates for the quarterly statements can be roughly estimated from the previous year, and rights are flagged up in the media anyway. Major changes in ownership, either of the trust or assets are also flagged up in the media with details in the relevant company announcements. Yield is easy to calculate but can also make reference to REITDATA site. Monitoring is therefore nothing more than the minimum any shareholder/unit holder does (should do?) anyway to track company/trust performance. My trading is infrequent because of the broad market cycles, maybe a year or two between tending to buy and tending to sell. So, while it is not entirely passive, it is not day trading either.