Cromwell drops plans to list euro Reit on SGX

If Cromwell's Reit IPO had proceeded, it would have been the first euro-dominated Reit on SGX, and Singapore's second-largest IPO this year.
If Cromwell's Reit IPO had proceeded, it would have been the first euro-dominated Reit on SGX, and Singapore's second-largest IPO this year.PHOTO: BLOOMBERG

Aussie property firm tells stock exchange decision based on current market conditions

SYDNEY • Australian real-estate company Cromwell Property Group has elected not to proceed with its plans for an initial public offering of a Reit (real estate investment trust) on the Singapore Exchange, the company said in a filing on the Australian stock exchange yesterday.

The IPO was to be the first euro-dominated Reit on SGX, and touted to be Singapore's second-largest this year.

Cromwell European Real Estate Investment Trust, a unit of Australia-listed Cromwell Property Group, had started taking orders earlier this month.

The company, which draws rental income from 81 properties in six European countries, had received significant interest from strategic, institutional and retail investors, but its decision to drop plans for the €1.09 billion (S$1.76 billion) IPO was based on current market conditions, the company said in the stock exchange filing.

"Cromwell continues to believe in the quality of Cereit's portfolio, its investment thesis and the exposure it provides to improving European real estate fundamentals," Cromwell chief executive officer Paul Weightman said, according to the filing.

It will re-assess the situation in conjunction with key stakeholders and strategic partners and will provide a further update in due course, it said in the filing.

However, media reports said the demand for its units was tepid. Demand from institutional investors was not up to the company's expectations as the deal size was too large, Dow Jones Newswires reported, quoting sources familiar with the matter.


  • $1.76b The firm's decision to drop plans to raise €1.09 billion (S$1.76 billion) was taken given market conditions.

Also, some investors were sceptical of the growth prospects in some of its European assets, given the investors' unfamiliarity with those markets, it said.

The Reit has a portfolio of retail, office and light industrial properties in gateway cities in Denmark, France, Germany, Italy, the Netherlands and Poland, valued at €1.83 billion.

It has more than 1,000 leases and a weighted average lease expiry of 5.1 years, which means that no more than 12 per cent of headline rent will expire in each year up to 2021.

About 69.1 per cent of the property portfolio comprises freehold land.

An SGX spokesman told The Straits Times that they cannot comment on specific companies, and will continue to support companies seeking to list Reit and infrastructure assets.

"Our Reits and business trust cluster is the biggest in Asia outside Japan with a total of 50 listings valued at close to $100 billion. The most recent such listing, NetLink NBN Trust, received IPO subscriptions of $5 billion, testifying to robust investor interest," the spokesman said.

"We continue to support a healthy pipeline of companies seeking to list Reit and infrastructure assets from diverse geographies."

Earlier this week, The Straits Times had reported that the Reit had earlier decided to cut the size of the IPO, reducing the number of units on sale from 1.58 billion to 1.3 billion units.

The offer price remained unchanged at €0.55 to €0.57 each, according to an amended draft prospectus lodged on Masnet.

This is a reduction from the 1.58 billion offer size initially proposed. The offer price remains unchanged. The Reit was expected to raise up to €739 million based on the €0.57 unit price.

Cromwell had earlier intended to keep its holdings in the Reit to between 12.7 and 13.2 per cent and committed to purchase 279 million to 289 million units, assuming the over-allotment option is not exercised.

It had declined to comment on its reasons for reducing the offer size.

The Reit was forecasting a distribution yield of 7.5 to 7.7 per cent for next year, to be drawn from rental income across 81 properties in Europe.

A version of this article appeared in the print edition of The Straits Times on September 23, 2017, with the headline 'Cromwell drops plans to list euro Reit on SGX'. Print Edition | Subscribe