Proceeds will be used to repay OUECT's existing borrowings.
OUE Commercial REIT has placed 233.3m new units at an issue price of $0.643 per new unit, which raised gross proceeds of approximately $150m.
According to OCBC Investment Research, the issue price represents an 8.1% discount to the volume weighted average price of $0.6993 per unit on March 8, and the gross proceeds will be used to partially repay OUECT’s existing borrowings.
"As at end 2016, given that the trust’s aggregate gearing was nearer the higher end of the spectrum versus its peers at 39.8%, we see this as a positive move that will lower OUECT’s gearing about approximately 4.3% and further strengthen its balance sheet," OCBC said.
It added, "We also note that, to mitigate interest rate volatility, about 79.3% of OUECT’s borrowings are on a fixed rate basis with an average term of fixed rate debt of 2.5 years."
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