SINGAPORE (Jan 12): Last September, Croesus Retail Trust (CRT) was taken private by Blackstone Group at a higher price than it ever garnered in the public market.

The trust had traded below its net asset value (NAV) for most of the 4½ years it was listed.

“I was obsessed with closing the valuation gap,” says Jeremy Yong, who was managing director of CRT’s trustee-manager and co-founded the trust.

“We needed to make sure we were trading at fair value so that our acquisition currency was strong enough to acquire new assets,” he adds.

As part of his effort to achieve this, CRT worked hard to court investors and more than doubled the size of its portfolio with a string of acquisitions and capital-raising exercises.

It also tested the notion that property trusts with internal managers garner better market valuations than those with external managers.

Yet, it was only when Blackstone came along with an offer to acquire CRT at $1.17 a unit, or a 20% premium to its NAV, that Yong achieved what he wanted. Investors who bought units in CRT at its IPO in May 2013 and accepted the offer from Blackstone last year would have seen a total return of 86% (with distributions reinvested).

See: Croesus Retail Trust unitholders approve Blackstone's $901 mil buyout offer

“It’s a sense of relief that the board and management were able to fulfil the promise,” Yong says. “Unitholders who kept the faith [got their return].”

How exactly did the idea to form CRT come about? Why was Blackstone willing to pay a price well above what CRT could achieve in the public market? 

Find out more our cover story this week in The Edge Singapore (Issue 813, week of Jan 15), where Yong provides a revealing retrospective on the challenges independent property trusts face in winning over investors and growing their portfolios.

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