The Business Times - February 2, 2010
Logistics group CWT Limited has proposed the sale and leaseback of two of its logistics facilities in a deal worth $445 million (US $313 million.)
CWT will sell CWT Commodity Hub and CWT Cold Hub to Cache Logistics Trust, for the purposes of Cache's eventual public listing as Asia's first logistics-focused real estate investment trust.
Cache, whose setting up is subject to regulatory approval, will be managed by ARA-CWT Trust Management (Cache) Limited. CWT will have a 40 per cent stake in the manager. The remaining stake will be held by ARA Asset Management Limited - a real estate fund manager tied to Hong Kong tycoon Li Ka-shing's Cheung Kong group.
The trust's property manager will be Cache Property Management Pte Ltd. CWT will have a 60 per cent stake in the property manager and the remaining 40 per cent stake will be held by ARA.
CWT said it will book a one-off gain of $157.7 million from the sale of the two logistics facilities, which are valued at $443 million. They are part of CWT's primary assets, located close to PSA Terminals, major ports and Singapore's central business district.
Cache will pay $445 million for the two facilities, of which $65 million will be settled in the form of Cache units. The rest will be paid for in cash.
CWT will use the sale proceeds to expand its logistics business and to settle its outstanding borrowings early, which it says will result in a significant boost to the group's financial muscle and competitiveness in the region.
In its statement yesterday, CWT also explained that Cache will be the first of its kind in Asia to capitalise on the positive outlook of the global logistics sector and the synergistic business models of CWT and Cache.
Cache holds an investment mandate that targets logistics properties in the Asia-Pacific region, with an initial portfolio of six logistics properties in Singapore, including CWT Commodity Hub and CWT Cold Hub.
CWT said Cache is expected to leverage on the rights of first refusal granted by CWT and the strengths of CWT to 'pursue yield-accretive acquisitions to achieve long term, regular and predictable distributable income for unitholders'.
Loi Pok Yen, group CEO of CWT, said: 'The creation of CLT (Cache) to invest in yield-accretive logistics properties in Asia is a historic milestone and enables CWT to own a capital-efficient asset-owning vehicle to complement our core logistics business operations as well as enhance the group's ability to expand its business regionally and globally.'
'In addition, the sale and leaseback will enable the group to participate in CLT through its holdings of Cache units and derive a stable income stream from CLT's distributions,' he said.
CWT is the largest listed logistics company in South-east Asia, offering integrated logistics solutions to the chemicals, commodities, automotive, marine, oil & gas, defence and industrial sectors.
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