28th Jun 2024 11:12
(Alliance News) - Regional REIT Ltd announced a sizeable equity raise, which received solid investor in support, in a sign that property investment firms can raise funds on the stock market, instead of turning to debt.
The firm on Thursday announced a GBP110.5 million fundraising plan.
It will raise the funds through a placing, overseas placing and open offer of 1.11 billion shares at 10p each.
The overseas placing concerns existing shareholders in "certain restricted jurisdictions" where an open offer cannot be made.
In addition, it announced a 1 for 10 share consolidation.
The fundraise will enable it to repay a GBP50 million retail bond.
It added that GBP26.3 million will go towards trimming debt and remaining GBP28.4 million will provide it with "provide additional flexibility to fund selective capital expenditure on assets".
Chair Kevin McGrath said: "The capital raising, supported by Bridgemere, will enable the company to strengthen significantly Regional REIT's financial position, reducing indebtedness and provide the company with greater financial flexibility and liquidity headroom."
Shore Capital Markets analysts said Regional REIT is among a "growing list of REITs turning to the equity markets to raise fresh capital".
"While in this case for balance sheet restructuring, rather than acquisitive or development-led growth, the support from investors, both new and existing, is impressive and surpassed our expectations – despite the expense and deep discount.
"This leads us to believe that equity markets can once again be a viable option in financial structuring for REITs, providing a welcome alternative to debt."
Shore Capital Markets said the equity raise was an "expensive and deeply discounted solution". Though it does offer the firm some "breathing space" to rejig its capital structure.
"While we, and several shareholders, had favoured the prospect of a debt refi over an equity raise – it looks preferable over the hefty 15% coupon on new debt that this would have involved. Regional offices continue to have their challenges but the company is at least now in a better position to manage these," Shore added.
Shares in Regional REIT fell 6.2% to 15.06 pence each in London on Friday morning. It had declined 26% on Thursday.
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Regional Reit