Malaysia-listed Hospitality REIT Stahill REIT has announced its plans to raise up to RM800 million by way of new units placement. Proceeds of the placement will partially be used to pay of loans that the REIT accumulated in the course of acquiring 3 Australian properties last year.

Properties in the Starhill REIT portfolio include the Ritz Carlton Kuala Lumpur and JW Marriot Hotel Kuala Lumpur. Photo : Starhill REIT

In November last year, Starhill REIT completed the acquisition of Sydney Harbour Marriott Hotel, Melbourne Marriott Hotel and Brisbane Marriott Hotel. They were financed primarily through borrowings. The proposed placement to raise gross proceeds of up
to RM800 million will be used to partially repay borrowings in order to reduce the gearing level for Starhill REIT.

In order to do that, Starhill REIT will need approval to increase its fund size from 1,324,388,889 units to a maximum of 2,125,000,000 units. It will also be looking to increase its borrowing limit to 60 percent of its assets value. The REIT has indicated that it is pursuing a higher borrowing limit for the flexibility of funding larger acquisition opportunities through borrowings in the future. Starhill currently holds a portfolio of 13 hospitality properties including the Ritz Carlon and JW Marriot Kuala Lumpur.

The proposals above will now need the approvals of Bursa Securities and unit holders in the REIT. However this is expected only to be done after Starhill REIT decides on the actual number of units that will be offered in the proposed placement and the price the new units will be offered at.

Starhill REIT will be making further details on the new units placement in due course. Units of Starhill REIT are currently trading at RM1.10 on the Bursa Malaysia.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.