Logistics Reit seeks $417m from IPO

ANOTHER real estate investment trust (Reit) is headed for the local bourse, this time focusing on logistics properties.

Cache Logistics Trust plans to raise $417.2 million through an initial public offering (IPO) of 474.1 million units. Of these, 41 million units will be offered to the public. It is the first Reit to list on the SGX mainboard after the recent global financial crisis – and it is set to be the biggest IPO this year.

The largest to date: Tiger Airways, which raised $247.7 million in January.

Based on the offering price of 88 cents a unit, the forecast for Cache is a distribution per unit of 7.65 cents this year – a distribution yield of 8.7 per cent.

The distribution yield is forecast to reach 8.82 per cent next year.

So far, Cache’s roadshow has been well-received by institutional investors.

Cache is managed by ARA-CWT Trust Management, which is 60 per cent owned by ARA and 40 per cent owned by CWT.

Upon completion of the offering, Cache will be 12.2 per cent owned by CWT, its sponsor; 1.9 per cent by ARA; and another 1.9 per cent by C&P Holdings – a major shareholder in CWT.

Cornerstone investors JF Asset Management Limited and Morgan Stanley Investment Management Company will hold 6.5 and 2.5 per cent respectively.

Cache’s initial portfolio comprises six logistics properties in Singapore with a gross floor area of about 3.9 million sq ft, valued at $730 million.

These include the CWT Commodity Hub, which is the largest warehouse in Singapore, and the CWT Cold Hub, the first ramp-up cold storage warehouse here.

These properties have a weighted average lease expiry of 6.4 years and a locked-in 1.5 per cent rent escalation per annum.

At a press conference yesterday, Mr Daniel Cerf, chief executive of ARA-CWT Trust Management, said: ‘The stable income is underpinned by the strong fundamentals of Cache’s properties…’

Cache plans to grow its portfolio through acquisitions of logistics properties in Asia-Pacific, but will focus on Singapore in the near term. Most of the IPO proceeds will go to the owners of the portfolio’s six properties, with $3.3 million set aside as working capital.

The IPO opens at 9am today and will end at noon on April 8. Trading on the SGX mainboard starts on April 12.

Source : Straits Times – 2 Apr 2010