SINGAPORE (Nov 21): The manager of SPH REIT has announced the launch of a private placement to raise gross proceeds of no less than $161.5 million to partially fund its proposed acquisition of a 50.0% stake in Westfield Marion Shopping Centre in South Australia.

Under the private placement, SPH REIT will issue some 156.6 million new units at an issue price of between $1.031 and $1.075 each.

The issue price range represents a discount of between 3.2% and 7.2% to the volume weighted average price (VWAP) of all trades done in the counter on Nov 20, the last trading day before the placement agreement was signed.

The issue price will be determined by the manager and the joint lead managers and underwriters – Credit Suisse (Singapore), The Hongkong and Shanghai Banking Corporation’s (HSBC) Singapore branch, and Oversea-Chinese Banking Corporation (OCBC) – following a book-building process.

The offer of new units under the private placement will be made to eligible institutional, accredited and other investors.

Assuming the minimum issue price of $1.031, the manger intends to use around $159.5 million, or 98.7% of the gross proceeds, to help fund its A$670.0 million ($636.5 million) acquisition of a 50% stake in Westfield Marion Shopping Centre, the largest shopping mall in South Australia.

The shopping centre has a gross lettable area of approximately 1.5 million sqft across a three-storey retail mall, with five storeys of office space.

See: SPH REIT to acquire 50% stake in South Australia's largest shopping centre for $636.5 mil

Beside the private placement, the manager also intends to finance the proposed acquisition via debt financing, and with proceeds from the $300.0 million of perpetual securities issued on Aug 30, 2019.

The manager says it believes that the private placement, in combination with perpetual securities and debt financing, is an efficient and overall beneficial method of raising funds to finance the proposed acquisition.

In connection with the private placement, the manager intends to declare a cumulative distribution for the period from Sept 1 to Dec 1 – the day immediately preceding the date on which the new private placement units are issued.

The manager currently estimates the quantum of distribution per existing unit under the cumulative distribution to be between 1.37 cents and 1.41 cents. The actual amount for the cumulative distribution will be declared when the manager announces SPH REIT’s results for the quarter ending Nov 30.

The new private placement units are expected to be issued and commence trading on SGX on Dec 2, 2019.

SPH REIT called for a trading halt before market open on Thursday for the private placement announcement. Units in the counter closed at $1.11 on Wednesday.