Straits Times: Wed, Nov 02
CAPITAMALL Trust (CMT) units lost as much as 5.3 per cent yesterday after the retail trust said it raised gross proceeds of about $250 million through a private placement.
CMT placed out 139.7 million new units at $1.79 each to fund upgrading works and investments in several of its shopping malls.
Net proceeds from the placement amount to about $245.7 million.
The new units will be issued to over 30 existing and new institutional investors from Asia, the United States and Europe.
The proceeds from the private placement will provide CMT with greater financial capacity to ramp up its organic growth through asset enhancement initiatives, said Simon Ho, chief executive of CMT's manager.
'These initiatives - which include those already announced for JCube, The Atrium@Or- chard and Iluma - are expected to boost CMT's net property income for the next few years,' Mr Ho said.
'At the same time, the proceeds from the exercise will reduce CMT's gearing and provide greater financial flexibility in view of the uncertain economic outlook.'
CIMB Research said in a new report that the private placement will help to strengthen CMT's balance sheet and raise equity at a time when its share price has held up at 1.2 times price-to-book value.
'This should quash near-term cash-call concerns while giving it the flexibility to drive growth through asset enhancement initiatives,' said CIMB's analysts, who issued an 'outperform' call on CMT with a price target of $1.93.
DMG & Partners Securities analyst Goh Han Peng similarly said that the new funds will come in handy for CMT to execute its asset enhancement initiatives. DMG maintained its 'neutral' call and target price of $1.94 on the stock.
Analysts were also positive on CMT's move to reduce its leverage marginally. The private placement is expected to reduce the trust's aggregate leverage from 40.1 per cent to 39 per cent.
'Moody's views the equity issuance positively as it will reinforce CMT's commitment to maintain its leverage below its targeted 40 per cent,' said Alvin Tan, Moody's Investors Service's lead analyst for CMT.
The ratings agency said it sees no impact on CMT's 'A2' corporate family rating or its 'A3' senior unsecured debt rating from its private placement.
But the market reacted negatively to the placement, and CMT units fell to as low as $1.775 before ending 8.5 cents down at $1.79 yesterday. Not helping the counter was the broad market retreat, which saw the Straits Times Index fall 2.33 per cent.
CMT is Singapore's largest largest real estate investment trust (Reit) and holds assets worth $8.6 billion.
Source: Business Times © Singapore Press Holdings Ltd.
Martin Koh/ Sherry Tang