SINGAPORE Real Estate Investment Trusts (S-Reits) raised more than S$1.8 billion in secondary fund-raising for the entire year in 2023, of which S$1.3 billion was raised through placements and another S$0.5 billion in rights issues.
This amount was inevitably lower in 2023, in a high interest rate environment, compared to the years before. S-Reits are however, seen to be actively managing balance sheet health via other means such as divestments and capital recycling as well as debt facilities.
Since start of 2024, at least eight S-Reits and property trusts have announced plans to tap on debt facilities or raise funds via the secondary market. Both Daiwa House Logistics Trust (DHLT) and ESR-Logos Reit (E-Log) announced new investments in the Japan market this year, to be funded via debt facilities.
DHLT will be funding the acquisition of a freehold logistics property located in Ibaraki Prefecture, Greater Tokyo, Japan with a purchase consideration of 2,640 million yen (S$24.1 million) through external debt financing. DHLT noted that its sponsor, Daiwa House Industry has continued to show its commitment to the growth of Reit by offering the property at a discount of 18.1 per cent to the average independent valuation.
E-Log intends to invest US$70 million (S$93 million) in Japan Income Fund (JIF), which has five properties sited on freehold land located across Tokyo, Osaka and Nagoya in Japan. As at Dec 31, 2023, the five high-quality prime logistics assets under management have an aggregate valuation of approximately S$1,744.7 million.
Frasers Centrepoint Trust (FCT) and Digital Core Reit (DCReit) conducted private placements this year and raised S$200 million and US$120 million of gross proceeds respectively. FCT noted that the private placement was approximately 2.5 times covered, with strong participation from new and existing institutional, accredited and other investors. The majority of the proceeds would be used to repay existing debts, pending the use of such amount to partially fund the proposed acquisition of additional interest in Nex.
DCReit increased its issue size from the previous US$100 million to US$120 million and intends to use approximately 62.5 per cent of the gross proceeds to fund future potential acquisitions. This may include the acquisition of further interest in a Frankfurt property which will the total interest in the property to be acquired by DCReit to 24.9 per cent as well as the acquisition of an interest in a data centre located in Japan.
Elite Commercial Reit (Elite Reit) closed out its preferential offering to raise gross proceeds of approximately £28 million (S$47.2 million) last month. The preferential offering was oversubscribed with a subscription rate of more than 120 per cent. Elite Reit noted that net proceeds will be used to repay debts, reduce gearing and strengthen balance sheet.
The Reit estimates that it will create a debt headroom of £58 million to weather any uncertainties that may arise from macroeconomic headwinds amid an elevated interest rate environment. Several S-Reits also announced new loan facilities, including ParkwayLife Reit and Mapletree Pan Asia Commercial Reit. Suntec Reit also announced that it has entered into a S$950 million sustainability-linked loan facility to refinance part of its outstanding borrowings and/or for general working capital purposes. SGX RESEARCH
The writer is a research analyst at SGX. For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook.
Source: SGX Research S-Reits & Property Trusts Chartbook.