Croesus Retail Trust - RHB Invest 2016-06-13: Proposed internalisation of the Trustee-Manager

Croesus Retail Trust - RHB Invest 2016-06-13: Proposed internalisation of the Trustee-Manager CROESUS RETAIL TRUST S6NU.SI 

Croesus Retail Trust - Proposed internalisation of the Trustee-Manager

  • Croesus Retail Asset Management announced that it will be seeking the approval of CRT’s Unitholders for the proposed internalisation of the Trustee-Manager, including its wholly-owned subsidiary, Croesus Retail Asset Management Co., Ltd. 
  • The Internalisation seeks to internalise the functions of the Trustee-Manager, such that overall management and day-to- day operations of CRT are brought “in-house”. 
  • Post Internalisation, positive cost savings resulting in a slight increase in DPU can be expected. For FY15, assuming the internalisation was completed; DPU for CRT is projected to increase by 1% from SGD7.94 cents to SGD8.02 cents. 
  • In addition, CRT will also be able to undertake new acquisitions of properties competitively at a reduced cost to Unitholders as any excess cash from payment of the acquisition fee to the Trustee Manager will be declared as dividends for the benefit of Unitholders.
  • The key members of the CRT group has also agreed to enter into service agreements with the Trustee-Manager lasting till a date ranging from 2018 to 2020 depending on which key personal. 
  • In relation to this internalisation, CRT will also be issuing 32.72m preference shares at SGD0.7293 per share, a 10% discount to the VWAP of trades done on 10 June 2016, fully underwritten by Citigroup Global Markets Pte Ltd. This will raise expected proceeds of SGD20m to SGD22.1m whereby majority of the funds raised will be partially used to fund the proposed internalisation. 
  • We maintain BUY on CRT, with an unchanged DDM-backed TP of SGD0.93.

Jarick Seet RHB Invest | 2016-06-13
RHB Invest SGX Stock Analyst Report BUY MAINTAIN BUY 0.93 Same 0.93