Singapore Reit Starhill completes $234 million rights offering

Investors snapped up a rights offering from Starhill Global Real Estate Investment Trust yesterday, helping the company to raise S$337.3 million ($234 million).

The Singapore-listed company received valid acceptances and excess applications for a total of 1.24 billion rights units, representing 129.3% of the 963 million rights units available in the offering, which Starhill launched in late June. The units were offered on a one-for-one basis and sold at a subscription price of S$0.35 each.

Since the rights issue was launched, units in the Reit have not moved notably: on the first day of the deal, June 22, they were trading at S$0.50. At the close of yesterday's trading, they were at S$0.51.

Included in the acceptances are the subsidiaries of YTL Corporation, which hold units in Starhill. The company took its full entitlement, 256 million units, representing 26.6% of the offering.

A balance of 10.8 million rights units were not validly accepted. These will be allotted to satisfy excess applications.

Starhill Reit owns property in Singapore, China and Japan. Its two properties in Singapore are on the city's main street, Orchard Road. Its Japanese assets are properties in central Tokyo, in areas such as Roppongi, Shibuya and Minato. In the western Chinese city of Chengdu, it owns an upmarket retail space. The 10 properties that make up its portfolio have a total value of around S$2 billion.

With the money raised, the Reit will pay off up to S$236 million of its outstanding debt which is worth around S$617 million. With the rights issue, its gearing will be reduced to 20.7% from 33.4%.

"The rights issue will reduce refinancing concerns in a tight credit environment and enhance Starhill Global Reit's financial flexibility to carry out asset enhancement and seize attractive acquisition opportunities near the trough of the property cycle," said Francis Yeoh, YTL Pacific Star Reit Management's executive chairman, at the time of the deal's launch.

The Reit has been controlled by Malaysia's YTL since December 31 last year, after it bought Macquarie's 26% stake in the trust and a 50% stake in the Reit manager through a principal-to-principal transaction.

The completion of Starhill's rights issue comes just days after another Singapore-listed Reit raised capital through a placement. On Tuesday night, Ascendas Reit took home $208 million to pay for a building for SingTel.

The joint bookrunners and underwriters for the Starhill deal were Credit Suisse, DBS and Merrill Lynch.