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Croesus suspended; Blackstone speculated to be suitor

No offer price mentioned in report; trust has current market cap of S$814m after units surge to 4-year high this year
Wednesday, June 28, 2017 - 05:50

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Feeeal Asahikawa mall in Japan (above) and Fuji Grand Natalie, a suburban mall in Japan's Hiroshima prefecture.

BT_20170628_LMXCRT_2954327.jpg
Feeeal Asahikawa mall in Japan and Fuji Grand Natalie (above), a suburban mall in Japan's Hiroshima prefecture.

Singapore

A TRADING halt by mainboard-listed Croesus Retail Trust on Tuesday got the market abuzz with speculation of a buyout offer for the trust.

A report on Tuesday named US private equity firm Blackstone as the offeror, citing anonymous sources. It did not state the offer price.

In April Croesus had announced that it had been approached with a potential acquisition offer, although the trust did not identify the offeror, only saying that discussions were preliminary, with no certainty of leading to any transaction.

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Croesus also added that its trustee-manager had appointed Citigroup Global Markets Singapore as the financial adviser for the transaction.

Blackstone does not currently have any stake in the trust. According to Bloomberg data, Croesus's three biggest unitholders are currently DBS Group (5.5 per cent), asset management firm Value Partners Group (4.8 per cent), and BlackRock (4.6 per cent).

Croesus is worth about S$814 million in market capitalisation. It also manages a S$1.5 billion portfolio of malls in Tokyo, Osaka, and other prefectures such as Hokkaido, Hiroshima and Fukuoka.

croesus portfolio

CIMB analyst Lock Mun Yee noted that the shareholding structure of the trust is very diversified, with the top 10 shareholders holding less than a third of the trust. This will make it difficult for any offeror, especially one without any prior stake, to buy out the whole trust, unless of course the price is very attractive.

Ahead of its trading halt, units of CRT had risen to a four-year high of S$1.055 on June 23, a meteoric 26 per cent rise year-to-date.

four year high

If Tuesday's Dow Jones mention of Blackstone proves true, it would add to a series of merger-and-acquisition deals in Singapore's property scene this year.

In April, Chinese conglomerate HNA Group made an offer to buy all the shares of logistics and warehousing firm CWT for S$1.4 billion.

In the same month, a consortium comprising ARA Asset Management group CEO John Lim, the Straits Trading Company, Cheung Kong Property Holdings, private equity firm Warburg Pincus and China's Avic Trust completed the privatisation of ARA after making an offer that valued the company at S$1.8 billion.

Last week, property developer UOL announced a share swap agreement with Haw Par that will enable it to raise its stake in another property group, United Industrial Corporation, in a move seen as a prelude to eventually privatising UIC.

Meanwhile, warehousing giant Global Logistic Properties is also in talks with potential bidders to sell itself.

As for Blackstone, it has constantly been rebalancing its property portfolio in Singapore in the last few years. In April this year, it sold Sime Darby Centre in Bukit Timah to property developer Tuan Sing for S$365 million after a keen contest with more than 10 bidders. Blackstone had bought a 70 per cent stake in Sime Darby Centre for just under S$200 million last year from Malaysian palm oil producer Sime Darby.

In 2015, Blackstone also reportedly sold StarHub Green, a light industrial building along Ubi Avenue 1, to a private property fund managed by Singapore-based AEP Investment Management for close to S$260 million.

In late 2014, it bought up a 10-storey apartment block at 21 Anderson Royal Oak Residence, and another 18 units at Paterson Suites in the thick of a distressed luxury housing market under pressure from the government's cooling measures.

As for Croesus, it has been doing well operationally. In its latest third quarter ended March 31, its distribution per unit rose 15.2 per cent to 2.05 Singapore cents on the back of acquisitions and improved tenant sales. Gross revenue rose 22.4 per cent to 3.01 billion yen (S$37.5 million), thanks to new mall acquisitions such as Fuji Grand Natalie, Mallage Saga and Feeeal Asahikawa; net property income rose 14.4 per cent to 1.61 billion yen.

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