Cambridge Industrial Trust Divest 23 Tuas Avenue 10

23 Tuas Avenue 10

On 11th April 2016, Cambridge Industrial Trust announced the plans to divest 23 Tuas Avenue 10 for S$16.5 million. The original price that Cambridge Industrial Trust bought the asset was S$8.55 million. This represents a gain of almost double the original price.

The proceeds from the divestment will be used to pare down debt and gearing (current 36.9%), and provide funds for potential growth opportunities locally and overseas.

Cambridge Industrial Trust Management Limited has indicated their strategy for FY2016 are

  1. Divestment of non-core assets
  2. Asset enhancement initiatives for existing assets
  3. Repaying debt and reducing gearing
  4. Acquisition of quality assets both locally and overseas

What is meant by Baa3?

Rating Scale

Soilbuild Business Space REIT has recently issued SGD100 million 3.60% fixed rate notes due 2021. Moody’s has given the notes a definitive rating of Baa3.

Honestly, when I saw the “Baa3” rating, I did not understand what it means. I thought it must be something good. It is very common for REITS to issue notes for refinancing when its debt is due and often I see crediting rating agencies such as Moody’s give a rating for the notes issued.

After some research, I found the below scale used by Moody’s on its website. It is known as Global Long Term Rating Scale.

Credit Rating Description
Aaa Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
Aa Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
A Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.
Baa Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.
Ba Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.
B Obligations rated B are considered speculative and are subject to high credit risk.
Caa Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.
Ca Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
C Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.

Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Additionally, a “(hyb)” indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms.*

OUE Hospitality Trust Rights Issue Over Subscribed

OUE Hospitality Trust Logo

On 6th April 2016, OUE Hospitality Trust announced that the rights issue was 139.9% subscribed.

I have taken up the rights and should see the stapled securities being added to my Central Depository by Wednesday, 13th April 2016.

Mr. Christopher Williams, Chairman of the REIT Manager, said: “We would like to thank stapled securityholders for their tremendous support of OUE H-Trust’s rights issue. The acquisition of CPEX will allow OUE H-Trust to further benefit from Changi Airport’s growth in the coming years as Terminal 4 is expected to be completed in 2017 and Jewel Changi Airport is expected to open in 2019.”

Number of Rights Stapled Securities % of Rights Issue
Valid acceptances 419,862,598 95.0%
Excess applications 198,232,740 44.9%
Total 618,095,338 139.9%