The offering, which is fully underwritten and non-renounceable, was offered to existing unitholders at a ratio of 214 preferential offering units for every 1,000 existing units at £ 0.27 apiece.

 

This was to raise about £ 28 million (S$47.2 million) in gross proceeds to repay debts, reduce gearing and strengthen the real estate investment trust&rsquo s (Reit) balance sheet.

 

The number of valid acceptances accounted for 63.3 million of the total preferential offering units. Excess applications, meanwhile, stood at 61.9 million preferential offering units, the manager said in a bourse filing on Tuesday (Jan 16).

 

The 40 million preference offering units not validly accepted will be allotted towards applications for excess units.

 

Sponsor Sunway RE Capital, which subscribed for excess preferential offering units, has been allotted some 31.2 million excess units. Including its provisional allotment, Sunway RE Capital has obtained a total of 37.3 million preferential offering units.

 

As a result, its unitholding has increased to 11.2 per cent from 5.8 per cent, the manager noted.

 

&ldquo With the successful completion of the preferential offering, we are turning our attention next to the refinancing task at hand, extending Elite Commercial Reit&rsquo s leases and future phases of growth,&rdquo said Joshua Liaw, chief executive of the Reit&rsquo s manager.

 

The manager expects the preferential offering units to be listed and quoted on the Singapore Exchange&rsquo s mainboard at 9 am on Jan 18.

 

The Singapore branches of CGS-CIMB and RHB were the joint underwriters for the preferential offering.

 

ELITE : MXNU -1.67% Commercial Real Estate Investment Trust : MXNU -1.67% (Reit) launched a fully underwritten non-renounceable preferential offering at £ 0.27 per unit to raise about £ 28 million (S$47.2 million).

 

The gross proceeds will be mainly used to repay debt and reduce gearing, strengthening the Reit&rsquo s balance sheet, said its manager on Tuesday (Dec 19).

 

Some 103,354,690 new units will be offered to existing unitholders based on 214 preferential offering units for every 1,000 existing units.

 

At £ 0.27 per unit, the issue price represents a discount of 10 per cent to the volume weighted average price of £ 0.30 on Monday.

 

The transfer books and register of unitholders will be closed on Dec 27 at 5 pm to determine the provisional allotment of the new units to eligible unitholders.

 

The manager noted that the preferential offering is &ldquo strongly&rdquo supported by the Reit&rsquo s sponsors &ndash Elite Partners and Sunway RE Capital &ndash as well as its substantial unitholders. &ldquo They have irrevocably undertaken to subscribe in full for their respective pro-rata allotments of preferential offering units.&rdquo

 

It added that Sunway RE Capital further committed to subscribe for excess preferential offering units, the total subscription of which would amount to a maximum of about £ 16.1 million of the new units.

 

&ldquo Collectively, Elite Commercial Reit&rsquo s sponsors and substantial unitholders have undertaken to subscribe for up to a maximum of £ 24.7 million or 88.6 per cent of the preferential offering units,&rdquo said the Reit manager, adding that the remaining amount of new units will be fully underwritten by CGS-CIMB Securities (Singapore) and RHB Bank through its Singapore branch.

 

Joshua Liaw, chief executive of the Reit manager, highlighted that the fundraising will enhance the Reit&rsquo s financial flexibility.

 

&ldquo The funds raised from the preferential offering will allow Elite Commercial Reit to reduce its gearing to 43.5 per cent, creating debt headroom and financial stability during a period of near-term macroeconomic uncertainty.&rdquo

 

He noted that the Reit&rsquo s immediate task in the coming year, upon completion of the preferential offering, is to refinance the debt maturing in November 2024. This is to prepare the Reit for growth when the market outlook stablises.

 

In a business update on Dec 5, the Reit manager reported a gearing ratio of 49.6 per cent as at Dec 1, up 3.8 percentage points from 45.8 per cent as at end-September. The Reit&rsquo s adjusted net asset value per unit stood at £ 0.43, representing a 15.7 per cent drop from £ 0.51 as at end-September.

 

ELITE Commercial Reit&rsquo s portfolio valuation as at Dec 1, 2023, stood at £ 412.5 million (S$697.1 million) across 150 properties, based on the latest external valuation conducted by CBRE.

 

While this is 11.2 per cent down from the real estate investment trust&rsquo s (Reit) £ 464.5 million reported portfolio value as at Dec 31, 2022, the manager said it represents a 9.5 per cent decline based on the carrying value of investment properties on a like-for-like comparison of the 150 properties. 

 

In a business update on Tuesday (Dec 5), the Reit manager reported an adjusted net asset value (NAV) per unit of £ 0.43, representing a 15.7 per cent drop from £ 0.51 as at end-September.

 

The adjusted NAV accounts for divestments of assets in October and December 2023, the repayment of loans in October 2023, and the value of the 150 properties as at Dec 1 this year.

 

Elite Commercial Reit&rsquo s gearing ratio rose 3.8 percentage points to 49.6 per cent as at Dec 1, from 45.8 per cent as at end-September.

 

Its manager nonetheless emphasised that this remains within the Monetary Authority of Singapore&rsquo s 50 per cent gearing limit. It also underscored the Reit&rsquo s &ldquo robust&rdquo interest coverage ratio of 3.3 times on a pro forma basis, despite the 9.5 per cent decline in portfolio value.

 

With no near-term debt maturity until end-2024, the manager said the Reit remains compliant with all financial covenants under its debt facilities.

 

This ensures that distributions to unitholders remain unaffected, it added.

 

Looking ahead, the manager said it remains positive on the relevance of the Reit&rsquo s fit-for-purpose portfolio of assets in the UK, which it highlighted as &ldquo part of the critical public infrastructure serving the UK&rsquo s social services sector&rdquo .

 

It also expects the Reit&rsquo s leases &ndash which are almost 100 per cent signed directly with the UK government &ndash to provide credit stability and income certainty to unitholders.

 

Joshua Liaw, chief executive officer of the manager, said: &ldquo We aim to continue actively enhancing and unlocking the portfolio&rsquo s value for our unitholders through proactive asset management strategies and continued tenant engagement.&rdquo  

 

ELITE Commercial real estate investment trust : MXNU +6.52% (Elite Commercial Reit)&rsquo s distribution per unit (DPU) for the nine months ended Sep 30 fell 25.6 per cent to 2.82 pence, compared to 3.79 pence during the same period last year.

 

Despite a 20.4 per cent rise in net property income for the three quarters to £ 32.5 million (S$54.2 million), distributable income dropped 25.1 per cent to £ 13.6 million on the year due to higher financing costs, said the manager on Tuesday (Nov 7).

 

Revenue for the period rose 2 per cent to £ 28.5 million.

 

The manager attributed the Reit&rsquo s &ldquo resilient performance&rdquo to the 13.1 per cent inflation-linked rent escalation since the start of April this year, the completion of dilapidation settlements for nine assets, as well as reduced debt after the repayment of its existing loans.

 

&ldquo This is partially offset by the absence of rental income from vacated assets and increased borrowing costs from the rise in Sterling Overnight Index Average rates.&rdquo

 

The manager also said a significant portion of the recycled gross proceeds were used to repay loans, saving borrowing costs and lowering the holding costs of the vacant properties.

 

As at Sep 30, the gearing ratio stood at 45.8 per cent, a slight improvement from 46 per cent a quarter ago.

 

The manager said it aims to further reduce gearing through strategic capital recycling and asset management strategies to increase the asset value. Its net asset value per unit remains stable at £ 0.51 as at the end of September.

 

Under the 50 per cent gearing limit, it has a debt headroom of £ 40 million, and about 62 per cent of the interest exposure is fixed.

 

With an interest rate coverage ratio of 3.3 times, every interest rate increase of 100 basis points would drag down its DPU by approximately 5 per cent, said the manager.

 

As the Bank of England has maintained its bank rate in the most recent meeting, the manager expects borrowing costs for Elite Commercial Reit to stabilise.

 

The Reit&rsquo s portfolio occupancy rate stood at 92.1 per cent as at the end of September, with a weighted average lease expiry of 4.3 years.

 

The manager highlighted that over 99 per cent of the leases were signed directly with the UK government, which provides &ldquo credit stability and income certainty&rdquo . It added that its portfolio&rsquo s primary occupier is the UK&rsquo s largest public service department, the Department of Works and Pensions, making the Reit&rsquo s assets a critical part of the country&rsquo s public infrastructure.

 

Joshua Liaw, chief executive officer of Elite Commercial Reit&rsquo s manager, said: &ldquo We are especially pleased to be able to divest five of the Reit&rsquo s vacant assets at a considerable premium to valuation, and are making good headway on unlocking value for our unitholders for the remaining vacant assets through a mix of asset management strategies including re-letting, change of use and disposal.&rdquo

 

As at Oct 25 this year, the Reit had realised five divestments for an aggregate sale consideration of £ 3.4 million, which represented a premium of about 12.2 per cent to the total valuation of the five assets.

 

The five properties are Openshaw Jobcentre, Manchester Cardwell Place, Blackburn Leeds Road, Bradford John Street, Sunderland and Crown House, Burton on Trent.

 

In addition to the divestments, the dilapidation settlements for nine assets have been concluded so far this year.

 

&ldquo Our active capital recycling strategy and prudent capital management have also improved Elite Reit&rsquo s financial flexibility,&rdquo added Liaw, noting that the Reit will continue focusing on enhancing portfolio resiliency and strengthening its balance sheet against macro uncertainties.