Capitaland Ascendas REIT Disastrous Acquisition of Data Centre & Science Park- Selling Out Long Term Loyal Retail Shareholders.

I am utterly flabbergasted by the mostly raving praises by analysts with regard to the recently announced S$700Mil acquisition of the new Tai Seng data centre and business property at Science Park by Capitaland Ascendas REIT ("CLAR"). Yes, I have no doubt that the usual yield accretive argument and stable & resilient income streams from established tenants (Shopee) makes perfect sense. But the financing aspect of this acquisition exercise is a slap in the face of long term loyal retail Unit-holders with the severe dilution in their investment into CLAR via only a private placement instead of opening up to all unit-holders. 

How bad is the dilution on long term unit-holders?

Most long term Unit-holders probably entered into CLAR at prices ranging from S$2.80 per unit to S$3.00 per unit. If one entered during the pre-COVID days, then it will be S$3.00 to S$3.50 per unit range. Worst still, CLAR management offered a 5% discount to the market price of S$2.6059 per unit on 27 May 2025, that is, S$2.47 per unit.

Overall, S$500Mil of private proceeds were raised to fund the purchase of the above mentioned properties at the discounted price per unit of S$2.470. 

Parting thoughts

Personally, I thought that the CLAR management ought to have opened up the fund raising to all retail-unit holders instead of taking the easy way out and selling out long-term loyal unit-holders. Anyway, if queried, CLAR management will probably come up with the stupid excuses of (i) uncertainty of successful fund raising via preferential rights issue in current economic climate and/or (ii) the need for speed to close out the deal. This is extremely disappointing as this corporate action does not benefit existing retail unit-holders and is a stab in their back.