Croesus Retail Trust - CIMB Research 2017-06-28: Proposed Privatisation Offer By Blackstone At S$1.17

Croesus Retail Trust - CIMB Research 2017-06-28: Proposed Privatisation Offer By Blackstone At S$1.17 CROESUS RETAIL TRUST S6NU.SI

Croesus Retail Trust - Proposed Privatisation Offer By Blackstone At S$1.17

  • Blackstone Group has offered to take Croesus Retail Trust (CRT) private at S$1.17/unit.
  • The offer price is 38% above 12-month VWAP and at a 23% premium to the Mar 2017 book value.
  • Unitholders will be entitled to 4.06 Scts of permitted distributions if the effective date falls on or before 31 Oct 2017.
  • In our view, the offer at 5% implied FY17F annualised NPI yield seems fair and we would advise unitholders to accept the offer. Maintain Add.



Privatisation offer from Blackstone 

  • CRT has received an offer from Cyrus BidCo Pte Ltd, controlled by private equity firm Blackstone Group, to acquire all the issued units in CRT, by way of a trust scheme, in compliance with the Singapore Code of Takeovers and Mergers. 
  • The scheme consideration price of S$1.17/unit is at a 38% premium to the 12-month VWAP and 23% and 31% above the Mar 2017 book NAV (which takes into account the market values of the properties of CRT as at Jun 2016) and Mar 2017 NTA, respectively.


Offer price of S$1.17 is at a 38% premium to 12-month VWAP 

  • The acquisition is conditional upon obtaining: 
    1. the approval of unitholders holding not less than 75% of voting rights, in person or by proxy, for an amendment in the trust deed, and 
    2. approval of more than 50% of the number of the unitholders representing at least 75% in value of the units held by unitholders present and voting, in person or by proxy, for the scheme. Court and other regulatory approvals are required as well. 
  • Once the scheme is effective, CRT will be delisted. Blackstone currently holds 5.03% of CRT.


Dividend distribution of 4.06 Scts 

  • Apart from the scheme consideration, unitholders will be entitled to a ‘permitted distribution’ of S$31.3m (4.06 Scts) as dividends for the period 1 Jan 2017 to effective date, if the effective date falls on or before by 31 Oct 2017, and up to 90% of CRT’s distributable income for the period from 1 Nov 2017 to effective date, if the effective date falls after 31 Oct 2017. 
  • This translates to an all-in consideration of S$1.21/unit.


Fair price, accept offer 

  • The offer price of S$1.17/unit translates to an implied 5% annualised FY17F NPI yield compared to its present book NPI yield of 5.7%. We think the implied NPI yield is fairly in line with current market transaction levels. 
  • We think this offer seems fair and advise unitholders to accept the offer. 
  • We raise our TP from S$0.98 to S$1.17 as we move from a DDM to a break-up value methodology. 
  • Pending the issuance of the offer documents and completion of the transaction, we maintain our Add call. 
  • Risks to our view could be non-completion of the transaction, which would lead to share price weakness.




LOCK Mun Yee CIMB Research | YEO Zhi Bin CIMB Research | http://research.itradecimb.com/ 2017-06-28
CIMB Research SGX Stock Analyst Report ADD Maintain ADD 1.17 Up 0.980



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