The placement met with strong demand, which allowed joint bookrunners DBS, Deutsche Bank and UBS to fix the price at the top end of the S$1.13 to S$1.18 range. This in turn meant that Mapletree, a Singapore-listed real estate investment trust that invests in logistics properties around Asia, sold 271.8 million units to institutional players.
The number of units was a direct function of the final price as the trust had approval only to raise S$349 million. The rest of that sum will come from an offer of 25 million shares to Singapore retail investors at a fixed price of S$1.13 that will take place today (January 19).
Of the institutional placement, 89.5 million units were bought by the trust sponsor, Mapletree Investments, in order to prevent its 30% stake in the trust from being diluted. The remainder of the placement, which was launched yesterday morning, attracted approximately S$2.6 billion worth of orders, or 12.5 times the number of units available, according to a statement to the Singapore stock exchange.
The subscription was well diversified, with participation from investors in Asia, Europe, Australia, United States and the Middle East. The order book also contained ôa healthy mixö of good quality institutional and high-net-worth individual investors, the statement said.
Investors were keen to participate in the offering to gain access to the latest acquisitions, which is estimated to be 12% accretive with regard to dividends per unit, according to a source close to the transaction.
The management has a good track record with regard to delivering on its growth strategy and since the listing of Mapletree in July 2005, its portfolio has expanded from 15 to 41 properties. As of September, these logistics properties, which are located in Singapore, Hong Kong, Malaysia and China, had a combined asset value of S$1,429.0 million ($930 million) and an average occupancy rate of 99.8%.
The unit price has benefited from this development and has risen 24% in the past year. Since the beginning of December when it revealed the planned acquisition, the trust is up 14% to WednesdayÆs close of S$1.20. The counter was suspended from trading yesterday as the placement was being completed.
The stock currently trades at a forward dividend yield of 4.2%, which is in line with the average among the Singapore Reits. The yield is estimated to increase to about 4.7% once the planned acquisitions have been completed.
Mapletree's plan is to buy eight new properties in Singapore, five in Malaysia, one in China and one in Japan û the trustÆs first ever investment in that country. The total cost of these acquisitions as well as the refinancing of two properties in Singapore and three in Malaysia that it has bought quite recently is estimated at S$456.7 million ($297 million). Aside from using the net proceeds of S$342 million from this fund raising exercise, the trust will also draw down S$86.7 million of borrowings to pay for the package.
Even so, the leverage of the trust will improve to 40.9% from 49.2% as a result of the sale of new units, which will create additional room to raise debt of up to S$808.8 million, according to the issuance circular.
Other positives from the acquisition plan include the increased number of properties (to 56), which will improve economies of scale and increase diversification both with regard to tenants and geographies, and an improved lease expiry profile.
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