This time around the real estate investment trust had been leveraged up to allow for a significantly higher return and according to sources the slightly downsized S$206.2 million ($131 million) offering was about 1.5 to 1.6 times covered with about 30 participating accounts.
The greater interest may have been partly due to a general turnaround in the market with the Singapore Straits Times Index having risen 4.1% between the time the IPO was first postponed on June 15 and the closure of the revamped offering last Thursday (July 13). Other Singapore REITs have also seen their prices recover slightly, which have pushed yields lower and increased the relative attractiveness of CambridgeÆs offer.
The trust, which is backed by a group of 17 property owners and focuses on industrial and warehousing properties, offered investors an annualised 7.5% yield for both 2006 and 2007, which was well above the 6.5% it offered the first time around. It also compared with an average 5.5% for other S-REITs and was about 250 basis points above the 10-year Singapore dollar swap rate.
To achieve the higher yields, Cambridge halved the portion of the trust that was sold to cornerstone investors to 19.5% from 39.2% in favour of taking on more debt. This increased the gearing level to 38.5% from 22% under the initial structure.
Under the revamped offering, the number of units available to institutional and retail investors was increased to 206.1 million from 176.5 million. The total amount of proceeds from the institutional, retail and cornerstone investors combined fell slightly from about $180 million -- as the vendors of the properties retained a combined 39% in the REIT compared with 31.2% under the original plan.
The deal was marketed through a three-day accelerated bookbuilding at a fixed price of S$0.68 per unit, which was unchanged from the fist offering. ABN Amro Rothschild and CLSA acted as joint bookrunners and underwriters for the deal.
The REIT, which includes 27 industrial and warehouse properties with a total value of S$519 million ($325 million), will start trading on July 25 after a retail offering that will be held this week.
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