Ascendas seeks private placement of 150 new units

The proposed private placement is projected to have a gross proceeds of S$298.5million-S$306million.

DBS said the placement units will be priced at S$1.99 – 2.04/unit representing a 2.1-4.5% to the VWAP of S$2.0482/unit of A-REIT’s last traded price.

Here more from DBS Research:

Proceeds to fund ongoing development/enhancement works:

Proceeds will be deployed towards a couple of ongoing development projects (Unilever, FedEx and Fusionopolis developments), selected enhancement works at Techplace II and 9 Changi South, and an acquisition of business space in Shanghai. We estimate these properties to return a weighted average projected yield of 6.7% vs an implied cost of capital of 6.6%. As such, these projects are projected to be earnings accretive.

Upside risk to earnings from potential acquisitions not factored in our estimates:

Gearing is estimated to head down towards 34.6% (32.1% immediately after placement) assuming the proceeds will be deployed towards the above projects. Assuming a target gearing ratio of 40%, A-REIT will have a potential debt-funded capacity of close to S$671m.

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