Link REIT to Raise $2.4B From Rights Issue to Repay Debt, Fund Acquisitions

Hong Kong’s Link REIT on Friday proposed a rights concern to elevate HK$18.8 billion ($2.4 billion) to pay down debt within the face of rising rates of interest and fund acquisition of extra property.

Asia’s largest listed property belief will concern one rights unit for each 5 current models held at a subscription worth of HK$44.20 per rights unit, Link mentioned in a launch.

Between 40 and 50 p.c of the online proceeds can be used to repay current debt and for common working capital, whereas the steadiness can be deployed for future investments with a deal with the retail, automotive park, workplace and logistics sectors throughout Asia Pacific.

“The proposed rights issue will strengthen Link REIT’s capital base and position us to capture accretive investment opportunities amid real estate markets’ repricing,” mentioned Link chairman Nicholas Allen. “It will further solidify our position as a leading Asia Pacific real estate investor and manager.”

Unitholder Options

The rights concern is being absolutely underwritten by banking giants HSBC, DBS and JP Morgan, Link mentioned Friday.

The HK$44.20 worth per rights unit represents a 26 p.c low cost to the theoretical ex-rights worth of HK$59.70 per unit and a 29.6 p.c markdown to the final traded worth of HK$62.80 on Thursday. Trading within the HKEX-listed models was suspended on Friday.

Qualified unitholders can choose to subscribe to the rights models, apply for extra rights models or promote their rights. They may also do nothing, wherein case their proportion of the full variety of models held can be diminished with out compensation.

Link expects to ship the providing paperwork to qualifying unitholders on 7 March, with a deadline of 21 March to settle for and pay for the rights models.

In a media briefing, Link CEO George Hongchoy mentioned the capital elevate would place Link to seize rising funding alternatives as actual property markets revive within the coming interval.

“We do believe that this is the right time to strengthen our capital base and to lower our net gearing below 20 percent in one exercise,” Hongchoy mentioned in response to questions from Mingtiandi.

Reloading for Future Deals

Link’s newest manoeuvre comes after the REIT entered Singapore late final yr with the city-state’s largest actual property acquisition of 2022: the S$2.16 billion ($1.6 billion) buy of a pair of suburban malls from Mercatus Co-operative Ltd.

Link affirmed that the rights concern isn’t straight associated to the Singapore acquisition and that the proceeds of the rights concern haven’t been earmarked for any particular funding alternatives.

“Link REIT is committed to growth under our Link 3.0 strategy, where we aim to optimise our portfolio through diversification and to grow our assets under management together with capital partners,” Hongchoy mentioned.

Each deal can be totally different, the CEO mentioned, however Link expects to make investments alongside pension funds, insurers and managers of third-party capital reminiscent of non-public fairness fund managers.

The HK$234 billion belief can also be trying to add its personal fee-charging service managing third-party capital as a manner to increase the enterprise and earnings streams, Hongchoy mentioned.