Ascott Residence Trust's Citadines City Centre Frankfurt. (Photo: Ascott Residence Trust)

Singapore-listed Ascott REIT has launched a SGD442.7 million (USD313 million) fully underwritten rights issue to fund the acquisitions of Ascott Orchard Singapore, and a 93% stake in two serviced residences in Germany.

The German properties are namely Citadines City Centre Frankfurt, and Citadines Michel Hamburg, both of which are being acquired from The Ascott Limited for EUR 65.4 million (SGD97.2 million).

The acquisition of these German properties will be accretive at an EBITDA yield of 5.4%, said Ascott REIT.

A further SGD381.6 million from the rights issue will then be used to pay for the REIT’s acquisition of Ascott Orchard Singapore, which is currently scheduled for induction by 3Q 2017.

Existing unitholders will be offered 481.7 million rights units at a ratio of 29 units for every 100 already held at the book closure date.

The rights units will be issued at SGD0.919 each, representing a 21.5% discount to the closing price of SGD1.17 as at 6 March 2017.

Ascott, which currently owns 44.2% of Ascott REIT, has undertaken to fully subscribe to its allotment of rights units.

Ascott REIT will also seek unitholders’ approval for the German properties acquisition at an extraordinary general meeting (EGM) that will be announced at a later time.

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.