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Cromwell European Reit talks IPO at 0.55 to 0.57 euro per unit, targets Sept 28 listing

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CROMWELL Property Group hopes to raise up to 1.25 billion euros (S$2 billion) in a Singapore initial public offering of a European property real estate investment trust (Reit) by the end of September, according to a preliminary prospectus lodged on Friday.

Price talk on the Cromwell European Reit is between 0.55 and 0.57 euro per unit, which would imply a yield-at-listing of 7.5 to 7.7 per cent. The maximum price will create an initial market capitalisation of about 1.2 billion euros.

The total maximum gross proceeds include 953 million euros that will be raised from the IPO itself, assuming an over-allotment option for up to 91 million units is fully exercised. Sponsor Cromwell, which will hold an 8.7 per cent stake in the Reit after listing if the greenshoe option is fully exercised, will subscribe for 48.8 million euros of units in a concurrent but separate deal which, together with its initial units, will contribute 108.9 million euros to the proceeds. Cornerstone investors Cerberus Singapore and Hillsboro Capital will also take a combined 15 per cent stake in a separate but concurrent deal, adding an additional 187.7 million euros of proceeds.

The proceeds will be used to acquire a portfolio of 81 commercial, industrial and retail properties in six European countries. Those properties have a weighted average lease expiry of 5.1 years.

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The Reit is expected to achieve distribution per unit of 4.23 euro cents to 4.27 euro cents in 2018, which would imply a distribution yield of 7.5 to 7.7 per cent based on the IPO price. Distributions will be paid in Singapore dollars by default; investors with foreign currency accounts can however opt to receive the distributions in euros.

Cromwell, an Australia-listed real estate management firm, is hoping to launch the IPO on Sept 21, and to list the Reit on Sept 28.

Goldman Sachs and UBS are the joint managers. DBS joins them as joint global coordinators.

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