CWT in deal talks for logistics facilities

Sale-and-leaseback move linked to potential setting up of Reit

CWT Limited is in talks to sell and lease back its logistics facilities, in connection with a potential setting up of a logistics real estate investment trust (Reit).

The company revealed this yesterday after Singapore Exchange (SGX) issued a query on the ’substantial increase’ in its share price.

CWT, which ended trading at 69 cents on Wednesday, hit a high of 74 cents yesterday – five cents or 7.24 per cent up.

It closed the day at 72.5 cents, up 3.5 cents or 5.07 per cent.

CWT halted trading at 11.25am after the SGX query went public in the morning.

Trading was lifted at 3pm after it gave its response.

The company said that it is in advanced discussions to sell and lease back its facilities at 24 Penjuru Road and 2 Fishery Port Road. The deals are connected to the potential listing of a logistics-related Reit on SGX.

But it highlighted that no definitive agreements had been executed, and no relevant regulatory and third-party approvals (including those from the Monetary Authority of Singapore and SGX) had been obtained.

CWT added that it explores acquisition opportunities from time to time.

‘Potential acquisitions which the company is currently pursuing remain subject to negotiations and finalisation of definitive terms and no definitive agreements whatsoever have been signed,’ it said.

‘The company does not expect any significant impact from such an acquisition even if it materialises.’

CWT also cited a favourable rating from Kim Eng Research as a possible factor behind the share price increase.

In a report yesterday, Kim Eng initiated coverage on the counter and issued a ‘buy’ call, with a target price of $1.11.

Analyst James Koh noted that CWT’s portfolio of warehouses is worth more than its market capitalisation. ‘CWT is a leading logistics player in Asia, with operations spanning 21 countries,’ he wrote.

‘As the largest owner of warehousing space in Singapore, it is also a price setter. With more projects in its pipeline, we believe the group will continue to unlock value for shareholders.’

Source: Business Times, 18 Dec 2009