Category Archives: Funds

New Reit hoping to raise $400m

Posted on 20 Mar 2010 | Comments Off on New Reit hoping to raise $400m

Cache Logistics Trust prospectus says 474.2m units will be offered at 84-88 cents each

CACHE Logistics Trust has lodged its listing prospectus with the Monetary Authority of Singapore, revealing that the new Reit hopes to raise about $400 million through its IPO.

According to the prospectus, Cache is offering 474.2 million units at 84 to 88 cents each.

A distribution yield in the range of 8.82-9.08 per cent has been forecast for 2011, depending on the issue price.

Cache is managed by ARA-CWT Trust Management (ACT) which is 60 per cent owned by ARA Asset Management Ltd and 40 per cent by CWT Ltd.

Daniel Cerf, formerly deputy chief executive of K-Reit Asia Management is ACT’s CEO. Mr Cerf, a licensed architect in the US, was previously general manager of special duties at Keppel Land.

Lim How Teck, who recently resigned as non-executive independent director of AIMS AMP Capital Industrial Reit Management, is ACT’s chairman and non-executive director.

Cache is a Singapore-based Reit and will principally invest in logistics properties in the Asia-Pacific as well as real estate-related assets.

Its initial portfolio of properties consists of six logistics warehouse properties in Singapore with an aggregate gross floor area (GFA) of 3.86 million square feet and a value of about $730 million.

The properties are CWT Commodity Hub, CWT Cold Hub, Schenker Megahub, C&P Changi Districentre, Hi-Speed Logistics Centre and C&P Changi Districentre. The properties are part of a sale and leaseback agreement entered by Cache with CWT and C&P Holdings respectively.

According to the prospectus, the initial portfolio is 94.1 per cent occupied by and contracted to 262 end-users comprising domestic and international companies.

The largest end-user accounts for 16.1 per cent of the total GFA of the initial portfolio. The top five end-users together account for 56.5 per cent of the occupied GFA.

CWT and C&P Holdings are the master lessees for these properties. Of the occupied GFA, 79.1 per cent is occupied by direct counterparties of the master lessees being third-party logistics service providers and third-party end-users.

The remaining 20.9 per cent of the occupied GFA is contracted from the master lessees by CWT related entities, which has in turn been fully contracted for use by third-party end-users.

C&P Holdings is a significant shareholder of CWT with a stake of 35.9 per cent.

The master lease agreements provide for lease durations ranging from five to 10 years and a weighted average lease expiry of 6.4 years, with locked-in annual rental escalations and a triple net lease structure for the first five years of the initial contracted lease term.

CWT and C&P has granted right of first refusal to Cache, providing the Reit with access to future acquisition opportunities. As at Dec 31, 2009, there are 11 properties totalling 2.3 million sq ft of GFA currently owned by CWT in Singapore, China and Vietnam and two income-producing properties totalling over 723,651 sq ft of GFA currently owned by C&P in Singapore of which Cache has first right of refusal.

Source : Business Times – 20 Mar 2010

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Bond issue seen improving CCT portfolio

Posted on 19 Mar 2010 | Comments Off on Bond issue seen improving CCT portfolio

It provides flexibility for acquisitions and asset enhancement initiatives: Goldman

CAPITACOMMERCIAL Trust’s (CCT) second major fund-raising exercise in less than a year could pave the way for the office landlord to improve its portfolio, analysts said.

The trust on Wednesday said that it will issue $225 million worth of convertible bonds and use 75-90 per cent of the proceeds to enhance its assets and refinance debt.

‘Although bite-sized, we think the proceeds from convertible bonds provides financial flexibility and paves the way for long awaited acquisition(s) and/or asset enhancement initiatives to enhance its office portfolio,’ said Goldman Sachs analyst Paul Lian, who has a ‘buy’ call on CCT.

He added that the news allays market concerns that CCT, which is partly owned by Singapore’s largest property group CapitaLand, is losing its foothold in the office market with the sale of Robinson Point and the potential redevelopment of StarHub Centre to residential use. Both deals were announced early this year.

In an update yesterday, CCT said that the convertible bonds issue has been fully placed out to institutional and accredited investors. The bonds, which are due in April 2015, are unsecured and convertible into new CCT units at a conversion price of $1.356 per new unit. They come with an interest rate of 2.7 per cent per year.

Credit Suisse, the lead manager for the issue, could exercise an option within the next 28 days to increase the size of the issue by up to $25 million to $250 million, CCT added.

The bond issue marks the second big fund-raising action for CCT in less than a year. The trust in mid-2009 raised $804 million in a rights issue and paid off some of its debt to cut down its gearing.

With this latest convertible bond issue, CCT will have more cash on hand. But gearing is expected to climb.

Goldman Sachs estimates that 2010 gearing could rise to 36 per cent from 32 per cent. But CCT has no major refinancing pressure until its $355 million convertible bond put option is due in May 2011 and $520 million worth of commercial mortgage-backed securities is due in Sept 2011.

CCT chief executive Lynette Leong pointed out that the bonds are unsecured, which preserves CCT’s existing pool of unsecured properties and ‘will give CCT the financial flexibility to respond quickly to any growth opportunities in the future’.

Eight properties with a total asset value of $2.8 billion (out of CCT’s eleven properties) are unsecured against any borrowings.

In a statement, Moody’s Investors Service said that it sees no impact on CCT’s ‘Baa2′ corporate family rating or ‘Baa3′ senior unsecured debt rating from the latest convertible bond issue.

‘Leverage will increase modestly, but the long-dated convertible bond issue will improve CCT’s liquidity and funding stability,’ said Moody’s vice-president and senior credit officer Peter Choy. ‘It will also provide funding for CCT’s portfolio reconstitution, designed to enhance asset quality.’

But others were bearish on the stock as office rents in Singapore are expected to continue sliding.

‘We think office rents could continue to trend downwards over the next 1-2 quarters and possibly bottoming out by end-2010,’ said DMG & Partners Securities, which issued a fresh ’sell’ call. ‘Judging from the huge supply of office space, it could take at least 1-2 years for excess capacity to be absorbed before rents start their upward climb.’

CCT shares lost four cents, or 3.5 per cent, to close at $1.09 yesterday.

Source : Business Times – 19 Mar 2010

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