Singapore: Cromwell European REIT to reduce IPO offer size to $1.1b

The SGX Centre at Shenton Way, 2017. Credit: DEALSTREETASIA

Cromwell European Real Estate Investment Trust (CEREIT), sponsored by ASX-listed Cromwell Property Group, on Monday launched an initial public offering (IPO) of up to 927 million euros ($1.1 billion) on the Singapore bourse.

According to media reports, Cromwell Property Group has been facing a potential downgrade by Moody’s Investor Service for its high level of debt relative to earnings. The firm also recently entered into a new short-term loan facility to fund its stake in CEREIT.

The firm also reduced the size of its IPO, selling 1.27 billion to 1.3 billion units at an IPO price of 0.55 euros to 0.57 euros each, according to Bloomberg. Previously, its draft prospectus had proposed an offer size of 1.57 to 1.58 billion units.

Assuming the top range of forecast prices, the REIT could be valued at 1.25 billion euros ($1.49 billion), making it among the larger REITs listed on the Singapore bourse.

The revised terms will see Cromwell Property GRoup buy 567 million to 587 million units in the REIT, resulting in a 25.9 to 26.8 per cent stake, where before it had sought to take up a holding between 8.7 to 12.7 per cent, with a purchase of 279 million to 289 million units.

The reduced offer size means that CEREIT will raise an estimated 739 million euros ($883.5 million). The REIT still intends to sell up to 334.8 million units to two cornerstone investors, Hillsboro Capital and Cerberus Capital Management, who have committed to purchasing 100 million euros and 88 million euros worth of units respectively.

The public offer will open on September 21, 2017 and will close on September 26, with the REIT to commence trading on the SGX on September 28.

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