Manulife U.S. Real Estate Investment Trust said it would undertake a rights issue to raise US$208 million to fund its the proposed acquisition of an office building in New Jersey.
The Singapore-listed REIT said on Sunday it had agreed to buy a 30-storey office building located at 10 Exchange Place in Jersey City, Hudson County, New Jersey from John Hancock Life Insurance.
The property enjoys prominent frontage along the Hudson River waterfront, facing the financial district of midtown Manhattan, it said in a statement.
According to independent market research consultant, Cushman & Wakefield, the Hudson Waterfront District is considered to be the strongest office market within Northern New Jersey, having historically outperformed the greater regional market in terms of occupancy levels and rental rates.
The total cost of the property is currently estimated to be about US$332.0 million, comprising of the purchase consideration of US$317.2 million and other costs.
Manulife Reit, the first pure-play US office reit listed in Asia, has proposed to undertake an underwritten and renounceable rights issue of 299.3 million new units at the issue price of 69.5 U.S. cents per unit.
Manulife intends to finance the purchase cost with debt financing and proceeds from the rights issue.
At 69.5 U.S. cents apiece, the units are priced at a discount of 28 percent to the closing price of 96.5 U.S. cents on August 31, being the last trading day of the units prior to the announcement of the rights issue, and some 21.6 percent to the theoretical ex-rights price of 88.6 U.S. cents.
DBS Bank and Deutsche Bank AG, Singapore branch have been appointed as the joint lead managers and underwriters for the rights issue.
Located on the Hudson River waterfront in New Jersey, the freehold office tower has unobstructed views of the Manhattan, New York City skyline and the Statue of Liberty.
The Property has a tenant base of 25 tenants, with top five tenants being Amazon Corporate , Rabo Support Services, ACE American Insurance Company, Kuehne & Nagel Inc and Opera Solutions.
As at 31 July 2017, the property is 93.1 percent leased.
Shares in Manulife fell 2 percent to S$0.945 on the Singapore Exchange.