Singapore: Cromwell to raise $1.6b to back its REIT listing on SGX

A view of the SGX signage outside their office in Singapore March 2, 2017. REUTERS/Edgar Su

Australian real estate investment (REIT) manager Cromwell Property Group plans to raise an estimated A$2 billion ($1.61 billion) to back its REIT listing on the Singapore Exchange (SGX) Mainboard.

Goldman Sachs and UBS are serving as joint managers, bookrunners and underwriters together with Daiwa Capital Markets, CITIC CLSA Securities and DBS Bank.

The offer size of 1.58 billion units consists of an international placement tranche of about 1.2 billion units. This is accompanied by a Japanese public offering of 268 million units, with the Singapore public able to access 79 million units.

According to media reports, the roadshows will be held in Singapore, Hong Kong, Tokyo and Europe, with the Cromwell European REIT planning to list by the end of the month and making it the Singapore bourses’ first euro-denominated REIT. It will list on 28 September with a market capitalisation estimated between €1.2 billion to €1.25 billion and is the bourses’ 14th listing this year.

The REIT owns a portfolio of 81 properties that include office, logistics, retail and light industrial situated across mature markets in the European union – Denmark, France, Germany, Italy, the Netherlands and Poland – with an aggregate value of €1.83 billion ($2.19 billion). These properties originate mainly from four Cromwell-run fund, with some assets acquired from private equity (PE) firm Cerberus.

To date, it has in excess of 1000 leases and a weighted average lease expiry (WALE) of 5.1 years; no more than 12 per cent of headline rent will expire in each year up to 2021. About 69.1 per cent of the property portfolio comprises freehold land.

Cerberus Singapore and Hillsboro Capital are anchor investors in the IPO and will hold 15 per cent of the firm, with the IPO adding to a strong recovery for the SGX, which promotes itself as a destination for listing business trusts and REITs.

Some comparables on the SGX include the Frasers Centrepoint Trust and Ascendas Real Estate Investment Trust. Its successful listing would make it the largest public offer since July 2017, which saw the listing of the NetLink NBN Trust raise $1.7 billion in the biggest IPO in Singapore in four years.

Cromwell will retain roughly 12.7 percent of the new vehicle itself, with the rest offered to Singapore investors. Based on price band estimations, a distribution yield of 7.5 to 7.7 per cent is forecast for next year.

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