CLT – BT

Cache Logistics Trust IPO to raise $417m

Reit’s cornerstone investors are JF Asset Mgt and Morgan Stanley Investment Mgt

CACHE Logistics Trust (CLT), the first real estate investment trust (Reit) heading for a Singapore listing since the global financial crisis broke, aims to raise $417.2 million in gross proceeds from its listing.

CLT will offer 474.1 million units at 88 cents each – a price that is at the top end of the 84-88 cent range indicated earlier.

Of these units, 433.1 million will be placed out and 41 million will be available to the public. The public offer will open today and close on April 8.

According to Reit manager ARA-CWT Trust Management (Cache), investors at roadshows have responded well to the initial public offering.

‘I think it will be very successful,’ said ARA Asset Management CEO John Lim at a briefing yesterday. ARA has a 60 per cent stake in the manager while logistics firm and Reit sponsor CWT Ltd owns the other 40 per cent.

CLT has attracted two cornerstone investors – JF Asset Management holding 41 million units and Morgan Stanley Investment Management Company holding 15.9 million units.

After the IPO is complete, 632.2 million units will be in issue. Trading of the units is expected to start on April 12.

Based on the offer price of 88 cents, CLT is projecting a distribution yield of 8.7 per cent for the financial year ending Dec 31, 2010, and a yield of 8.82 per cent for 2011.

CLT’s initial portfolio will comprise six logistics properties in Singapore with a total gross floor area (GFA) of 3.9 million sq ft. Growth is on the cards – the Reit will focus on expanding locally in the near term before looking at acquisitions in foreign markets such as Greater China and Malaysia.

‘We need to make certain that we have a good base…and we also want to make sure that the timing is right to enter (overseas) markets,’ said CEO of CLT’s manager, Daniel Cerf.

Besides, CLT has a right of first refusal from CWT and its substantial shareholder C&P, on 13 properties with a GFA of 2.9 million sq ft. ‘You have to eat whatever you have on your plate first,’ Mr Lim quipped.

CLT will start off with an aggregate leverage of 25.9 per cent – one of the lowest levels in the Reit industry. According to Mr Cerf, leverage that is 30 per cent or less would be optimal, though the level may change as CLT acquires properties.