After cancelling its IPO after cutting its IPO size, Cromwell European REIT is making another IPO attempt with a much smaller offer of a billion units instead.
"Cromwell European REIT's prospectus Wednesday showed that the company is offering 428.54 million units to institutional and retail investors, and another 581.8 million units to investors who have agreed to take them up ahead of the IPO (at 55 European cents each).
"Cromwell had, in September, offered 1.91 billion units at up to 57 European cents each. The company has also reduced the number of assets that will be in the REIT--down from September's 81 assets."
Source: WSJ
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Earlier this month, when I blogged about Cromwell European REIT, I mentioned that the sponsor, post IPO, would be holding a rather smallish stake in the REIT.
To me, it seems as if the REIT is a place for the sponsor to dump their rojak portfolio.
"It gives me the feeling that the sponsor wants to dump everything into a pot and be done with it." (See related post at the end of this blog.)
Well, things have changed.
I don't know why but it seems that they have decided to shrink the size of the IPO and the sponsor will now have a stake of 25.9% to 26.8% in the REIT.
These are much better numbers.
There will be a better alignment of interests with other investors in the REIT, for sure.
Simply put, if Cromwell European REIT should do badly, the sponsor will hurt much more now compared to when they were going to have just a 12.7% stake.
So, unless they enjoy pain, with a much larger stake in the REIT, they have a stronger incentive to do better.
Although this is a positive development for retail investors in the REIT, I still cannot help but feel somewhat uneasy with the rojak nature of the portfolio from the get go.
I understand that they bought these properties from various funds looking for exits but it seems rather hasty to me.
Having said this, all investments are good investments at the right price.
Trading starts on 28 Sep (Thu).
Related post:
Cromwell European REIT IPO.
Reference:
Cromwell REIT cuts IPO size, ST, 18 Sep 17.
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| https://www.theedgesingapore.com/negative-view-cromwell-european-reit-down-under |
Thank you for this report. If it goes down after IPO, I may be interested.
ReplyDeleteI am not sure what to do next after Croesus. I am deciding allocating a fair bit on AIMs even if I am buying at a premium.
Hi arithmos,
ReplyDeleteIf all the REIT's properties were in Germany, Europe's strongest economy, with its numbers, it would have been a very persuasive proposition.
Having said this, if we should be compensated with a higher distribution yield, it could be worth a bite.
SINGAPORE (Sept 18): Cromwell European Real Estate Investment Trust (CEREIT) today launched an initial public offering of up to 927 million euros ($1.5 billion) in Singapore.
ReplyDeleteThe REIT is sponsored by Australia’s Cromwell Property Group, an ASX-listed real estate manager which was lately reported to be facing a potential downgrade from Moody’s Investor Service for its high level of debt relative to earnings. Cromwell Property Group also recently entered into new short-term loan facilities to fund its stake in CEREIT.
Hi,
ReplyDelete.... food for thought ....
https://www.theedgesingapore.com/negative-view-cromwell-european-reit-down-under
Hi,
ReplyDelete... food for thought ....
https://www.theedgesingapore.com/negative-view-cromwell-european-reit-down-under
Hi Laurence and jojo,
ReplyDeleteIt would explain the rojak nature of the REIT's portfolio.
I guess my feeling that the sponsor seemed rather hasty in their effort to divest is not without merit.
With AK refusing to take up anchor position in this listing, it has nowhere to go but Down.
ReplyDeleteRe:
ReplyDeletehttps://www.theedgesingapore.com/negative-view-cromwell-european-reit-down-under
In the article, it is mentioned that "The yield for 2018 would be between 6.3% to 6.9%"
In every other sources I read, the yield is 7.5% to 7.7%, I really doubt the integrity of the article?
An Australian real-estate company has pulled its plans for an up to EUR1.09 billion (US$1.30 billion) initial public offering in Singapore as demand for its units were tepid, people familiar with the process said Friday.
ReplyDeleteCromwell European Real Estate Investment Trust, a unit of Australia-listed Cromwell Property Group, had started taking orders earlier this month in what would have been Singapore's second-largest IPO this year.
It would have also been the first company to offer shares denominated in euros in the city-state, which is one of the sought-after destination for REITs in Asia.
People familiar with the process said that demand from institutional investors wasn't up to the company's expectations as the deal size was too large. Also, some investors were skeptical of the growth prospects in some of its European assets given its unfamiliarity with those markets.
A spokesman for Cromwell Property Group declined to comment. The shelved IPO plan also indicates investors remain wary of new offerings in a volatile global market.
Write to P.R. Venkat at venkat.pr@wsj.com.
(END) Dow Jones Newswires
September 22, 2017 03:40 ET (07:40 GMT)
They must have got wind that AK refused to subscribe to the IPO. Which means followers of ASSI blog wouldn't even touch it with a 5-foot pole. The only way out for them was to abandon the listing altogether.
ReplyDeleteHi Laurence,
ReplyDeleteI am sure it has nothing to do with me since I have avoided participating in IPOs for many years by now. :)
The Oracle of Singapore on REIT refuses to touch Cromwell European REIT, sighting weakness in its markets, causing the REIT to not able to float on SGX.
ReplyDeleteAK showing his magic again 😀
Seriously, I plan to buy some lots of the REIT beforehand. Now with the plan abandoned, it is hard time again to source for something worthy of consideration
Hi redponza,
ReplyDeleteRumors aplenty.
I am 100% innocent. -.-"
Quote: AK showing his magic again ��
ReplyDeleteThat's no magic. It's perfected skill. When AK sneezes, stocks plunge. Lol.
Hi Laurence,
ReplyDeleteI am uncomfortable with statements like that. :(
I don't want to be called in by the SGX or MAS for investigation. :(
I appreciate your kindness but not like this. :(
An Australian real-estate company Wednesday revived plans for an initial public offering in Singapore, seeking to raise 556 million euro ($657 million), two months after pulling the sale due to weak demand.
ReplyDeleteCromwell European Real Estate Investment Trust, a unit of Australia-listed Cromwell Property Group, will begin taking orders from investors Thursday.
In a filing with the central bank, Cromwell European REIT said that it will sell up to one billion units at 55 European cents each and the REIT's initial portfolio will comprise 70 assets that include office, retail and industrial properties from five European countries including Denmark, France, Germany and Italy.
In late September, Cromwell had decided against moving with its IPO, citing market conditions. People familiar with the process had said that demand didn't meet the company's expectations, indicating investor caution in a volatile global market.
Cromwell European REIT's prospectus Wednesday showed that the company is offering 428.54 million units to institutional and retail investors, and another 581.8 million units to investors who have agreed to take them up ahead of the IPO.
Cromwell had, in September, offered 1.91 billion units at up to 57 European cents each. The company has also reduced the number of assets that will be in the REIT--down from September's 81 assets.
The company is also offering a higher yield. Cromwell European REIT is now planning to pay a yield of 7.8% in 2018 against the earlier yield of between 7.5% and 7.7%.
Write to P.R. Venkat at venkat.pr@wsj.com.
Dow Jones Newswires
AK, what's your take on this revised offer ? Looks more attractive than the previous offer which they pulled out.
ReplyDeleteHi betta man,
ReplyDeleteThey removed some assets and are trying to lure investors with a slightly higher yield.
I still think it is a Rojak REIT and lacks a clear strategy.
Being a much smaller offering now, it could take off unlike the earlier offer.
Not really interested for now, I will wait and see.
Without any glowing report and buy recommendation from AK, Cromwell European Reit's stablising manager is left holding the Pot (AK's choice of word) :
ReplyDeleteCEReit's stabilising manager behind a third of volume since IPO
THU, DEC 14, 2017 - 12:25 PM
THE stabilising manager for Cromwell European Reit (CEReit) has bought 27.89 million units from the open market since the trust's Nov 30 initial public offering (IPO), accounting for one third of the counter's trading volume since listing and helping to support its market price.
The latest round of purchases on Wednesday comprised 1.795 million units bought between 0.54 and 0.55 euro apiece, according to filings with the Singapore Exchange. Those units represented 58.4 per cent of the total units traded on Wednesday.
UBS, the stabilising manager, has bought 27.89 million units since the counter was listed, accounting for 33.3 per cent of the total traded volume over those 10 sessions. The units were bought between 0.535 and 0.55 euro each.
UBS's mandate allows it to buy up to 45.454 million units for stabilising action. UBS has used up 61.4 per cent of that allowance so far, leaving another 17.6 million units that can be purchased.
CEReit's stabilising manager behind a third of volume since IPO
Hi Laurence,
ReplyDeletePot? I don't remember. Baby? Maybe. :)
Anyway, this has nothing to do with me. I am sure. ;)
The stabilizing manager is kept very busy.
Hope they don't run out of bullets. ;p
You did use the word POT in your article :
ReplyDeleteQuote
"It gives me the feeling that the sponsor wants to dump everything into a pot and be done with it."
Unquote
Hi Laurence,
ReplyDeleteAh, your memory is better than mine. :)