Fortune REIT launching S$352.6 million rights issue

Mainboard-listed Fortune REIT is launching a HK$1.9 billion or about S$352.6 million rights issue to expand its operations.

The REIT will issue about 825 million units in the one-for-one rights offer.

The price of HK$2.29 per unit represents a 44 per cent discount to the last traded price of HK$4.10 per unit.

Fortune REIT said about HK$1.6 billion of the total amount raised will be used to buy three suburban retail properties – Metro Town, Caribbean Bazaar and Hampton Loft. The rest of the money will go towards enhancing its 11 existing malls.

The REIT has also secured debt facilities of up to HK$3.1 billion to refinance an existing facility due in June 2010.

It is bullish about the prospects for its proposed acquisitions.

Justin Chiu, chairman of ARA Asset Management, the Manager of Fortune REIT, said: “They are all part of a major residential development which fits right into the investment criteria for the Fortune REIT portfolio and we find that the existing yield is good at slightly more than five per cent.

“So we think it would bring in very solid income in the long-term interest of our investors. The income is very stable and steady and the quality of tenants is very good. So we are not concerned about the so called asset bubble in Hong Kong or Singapore.”

Source : Channel NewsAsia – 24 Aug 2009

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