Cromwell European REIT seeking to raise €1.25bn in Singapore IPO

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Cromwell European REIT (CEREIT) has lodged a preliminary prospectus for a listing on the Singapore Exchange main board, with plans to start trading on September 28.

Its sponsor, the Australian-listed Cromwell Property Group, has begun a roadshow in Asia and Europe to promote the initial public offering (IPO), seeking to raise between €1.21bn and €1.25 bn.

The IPO will have 1.58bn units priced at between €0.55 and €0.57 each.

Cromwell has already secured two cornerstone investors in Cerberus Singapore, with a 7% stake, and Hillsboro Capital with 8%.

Although listed in Singapore, just 5% of the units will be offered to the public there; he balance will be offered to international investors, with an allocation of almost 16.9% (268m securities) to Japan.

Cromwell is expected to take up between 8.7 and 12.7% in CEREIT, depending on the final allocation.

The preliminary prospectus, lodged last Friday, provides a forecast yield of between 7.5% and 7.7%.

Commentators in Singapore said the trust offers investors an attractive dividend yield, adding that there is positive investor sentiment on the economic outlook for European real estate.

The bulk of the proceeds will go towards acquisition of 81 properties located in six countries in Europe. These are assets previously owned by Valad Europe – before Cromwell took over Valad in 2015.

Office and industrial assets each account for about one-third of the portfolio, retail represents 27%, and the balance is made up of three campuses leased to governments, and a hotel in Italy.

The portfolio has a weighted average lease expiry of 5.1 years and occupancy as at April 30 2017 of 89.3%, according to the prospectus.

Singapore authorities welcome the CEREIT IPO because the Singapore Exchange has long been campaigning to recruit foreign listings, including more real estate and business trusts, to provide a greater diversity of assets and foreign currency exposure.

The Singapore Exchange has seen a number of REITs delisted, while some, including the Croesus Retail REIT and Global Logistic Properties (GLP), are being taken private.

Blackstone has made a SGD901m (€558m) offer to buy out Croesus and is awaiting final shareholder approval, while a Chinese consortium led by GLP’s CEO Ming Mei is taking over GLP.

Having lost out on GLP, Asian-based logistics group ESR, backed by Warburg Pincus, is in discussions to take over the listed industrial trust Sabana Shariah Compliant Industrial REIT.

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