Logistics and warehousing landlord Cache Logistics Trust (Cache)(SGX:K2LU) is intending to carry out a placement of 70,000,000 new units to institutional and other investors at an issue price of between $1.24 and S$1.265 per new unit.

Cache Logistics Trust
Cache Logistics Trust presently holds a portfolio of high quality logistics and warehousing properties across Asia Pacific. 

Based on the issue prices, the REIT is expected to raise gross proceeds of approximately S$86.8 million. The net proceeds from the private placement amount to approximately S$84.2 million, after deducting the underwriting and selling commission and other expenses related to the placement.

From these proceeds, approximately S$57.3 million will be used to wholly fund the proposed acquisition of the property known as Precise Two located at 15 Gul Way, Singapore. Precise Two is a newly completed ramp-up logistics warehouse located in the Jurong Industrial Precinct. The acquisition is intended to further enhance the quality of Cache’s existing portfolio and improve DPU to unit holders of the REIT.

The acquisition of Precise Two is executed a sale and leaseback arrangement to Precise Development Pte. Ltd. on a lease agreement for six years, and an option to renew for another six years, and locked-in rental escalation of 4 per cent every two years. The property is currently 100 per cent occupied.

A further S$26.9 million from the placement will be used to fund potential acquisitions and pare down debt. Gearing for the REIT is expected to decrease from 31.7 per cent as at 31 December 2012 to 29.2 per cent immediately after the placement

The remaining S$2.6 million will be used to pay the estimated fees and expenses related to the placement.

The placement of 70 million new units represents a dilution of 9.9 per cent of the total number of units currently in issue. They are expected to be distributed by 27 March 2013. Units of the REIT hovers near a seven week low of S$1.26 to S$1.28 on the news.

The placement will be managed by DBS Bank and Standard Chartered Securities (Singapore) as joint lead managers and underwriters.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.