KUALA LUMPUR (Feb 15): Hektar Real Estate Investment Trust (Hektar REIT) is issuing five-year medium-term notes (MTN) worth RM215 million — the first issuance under Hektar MTN Satu Sdn Bhd's MTN programme of up to RM500 million in nominal value.

Hektar MTN Satu is a special purpose entity incorporated to raise financing on behalf of Hektar REIT. It is wholly owned by MTrustee Bhd, the trustee of Hektar REIT.

In a bourse filing on Thursday, Hektar REIT said the MTN programme has a tenure of 10 years and includes the issuance of guaranteed tranches of up to RM230 million. It added that the guaranteed tranches benefit from unconditional and irrevocable guarantees by Credit Guarantee and Investment Facility, a trust fund of the Asian Development Bank.

“Proceeds from the guaranteed MTN will be utilised by Hektar REIT to refinance existing borrowings of Hektar REIT and fund capital expenditure as well as asset enhancement initiatives of Subang Parade,” it said.

According to the pricing supplement document published on Bank Negara Malaysia’s Financial Markets Investor Portal, the coupon rate stands at 4.2% per annum. Meanwhile, RAM Rating Services Bhd has assigned a rating of AAA to the guaranteed tranches of up to RM230 million.

Affin Hwang Investment Bank Bhd is the principal adviser, lead arranger and lead manager for the MTN programme.

For the nine-month period ended Sept 30, 2023 (9MFY2023), Hektar REIT's profit declined by 32% to RM22.99 million from RM33.82 million in the corresponding period of the previous financial year.

At Thursday’s market close, Hektar REIT units increased by half a sen or 0.79% to 63.5 sen, valuing the group at RM369.2 million.