Balance sheets are boosted by S-Reits before the fiscal year ends

As 2023 comes to an end, a few real estate investment trusts (S-Reits) that are listed in Singapore have been making moves to strengthen their balance unit sheets before the end of the fiscal year. Five Reits have taken a range of steps over the last week, including asset divestments, debt reduction, and stock raising.

Reit managers have prioritized active capital management this year due to increased investor focus on the gearing levels of Grand Dunman and pressure on valuations from rising interest rates.

Although S-Reits are permitted by law to have a maximum gearing ratio of 45 to 50 percent, contingent upon their interest coverage ratio, managers frequently aim to maintain gearing levels below the 40 percent psychological barrier that some investors hold.

First-class offering

On December 18, in the evening, Elite Commercial Reit announced a fully underwritten preferential offering valued at £28 million (S$47.2 million), supported by significant unitholders and the company’s sponsor. The Reit’s volume-weighted average price on December 18, the final full trading day before the offering was announced, was 10% less than the issue price of £0.27 per unit.

According to Elite Commercial Reit, the offering will lower its virtual tour from the current 49.6% to 43.5%.

Additionally, it would increase the Reit’s market capitalization and debt headroom by £58 million.

Repurchase of bonds

On December 18, Cromwell European Real Estate Investment Trust said that it had used the profits from a recent disposal to purchase back 50 million euros, or S$72.6 million, in bonds.

10% of the 500 million euro 2.125 percent bonds that were due on November 19, 2025, were repurchased. The total principal amount of the bonds that are still outstanding after the repurchase will be 450 million euros.

According to the manager, the buyback was carried out to minimize the impact of rising interest rates on distribution per unit and to lower the refinancing risk of the November 2025 bonds ahead of schedule.


On December 20, CapitaLand Ascendas Reit (Clar) declared that it would sell three Queensland, Australia, properties for more than their assessed value.

The properties, 77 Logistics Place, 62 Sandstone Place, and 92 Sandstone Place, had a combined market valuation of S$60.4 million as of August 31, which is 6.2% higher than the transaction amount of S$64.2 million.

The divestment is anticipated to be finished in the first quarter of 2024. The three properties were bought in October and November of 2015.

The manager stated that the divestiture is in line with its asset management plan, which aims to maximize returns for unitholders and enhance the quality of Clar’s portfolio.

As part of its ongoing portfolio reconstitution strategy, CapitaLand Ascott Trust (Clas) announced on December 17 that it would sell three hotels in Japan to an unaffiliated party for 10.7 billion yen (S$99.8 million).

Hotel WBF Honmachi, Hotel WBF Kitasemba East, and Hotel WBF Kitasemba West are the names of the properties.

15% more than the book value is being divested at this price. The deal is anticipated to close in the first quarter of 2024 and generate 3.9 billion yen in net proceeds. The trust is expected to record a gain of 1.1 billion yen net.

According to Clas, the divestitures enable it to unleash the value of the properties and reallocate funds to activities aimed at enhancing the portfolio’s assets and/or generating stronger yields.

IReit Global stated on December 22 that it was selling Il. lumina, a Spanish property, to an unaffiliated third party for 24.5 million euros, a 5.2% increase over an independent appraisal that was completed in June.

The nine million euros in net proceeds will be used to pay down debt and evaluate potential investments, acquisitions, and asset improvements.

Pro forma, as of December 31, 2022, IReit’s overall leverage would have decreased from 32% before the divestiture to 31%.

According to the manager, the disposal will be finished by the end of January 2024 and is consistent with its asset management strategy.

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