Boustead Projects has established a private business trust, Boustead Industrial Fund, in Singapore on Dec 31, 2020.

The fund has an investment mandate to invest in, administer and manage certain investments in logistics, business parks and industrial properties, to achieve a stable flow of recurring income and capital growth for its unitholders.

The fund manager is Boustead Projects’ wholly-owned subsidiary Boustead Industrial Fund Management, the trustee of Boustead Industrial Fund is Perpetual (Asia) Limited.

Boustead Projects is the sponsor of the fund.

Upon the constitution of the fund, one unit was issued to Boustead Projects at an issue price of $1.

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Following the establishment of the fund, Boustead Projects has entered into subscription agreements for the company to subscribe for new units in the fund, where Boustead Projects will hold an initial 25% interest in the fund’s units.

The company will hold up to $59 million in aggregate principal amount of 7% notes due 2031 issued by Perpetual (Asia) as trustee of the fund, under the notes subscription agreement. The notes represent some 25% of the aggregate principal amount of notes issued.

The agreement was entered on Dec 31, 2020, with Boustead Projects, the fund’s trustee and manager, United Overseas Bank (UOB) and the initial fund investors.

SEE: CGS-CIMB maintains 'buy' for Boustead Singapore and Boustead Projects with raised target prices

UOB is the lead manager of the issue of the notes.

In addition, after the assignment prohibition period expires, the fund will be required to acquire the remaining 51.0% partnership interests in BP-CA3 or the industrial property held thereafter, under the fund subscription agreement.

In connection with the BP-CA3 subsequent acquisition, the company shall subscribe for additional units and notes to fund 51.0% of the purchase price for the subsequent acquisition after

The initial fund investors are AP SG 21, a special purpose vehicle for institutional real estate investors and Metrobilt Construction, an indirect wholly-owned subsidiary of Metro Holdings.

Following the establishment of the fund, Boustead Projects has agreed to sell its directly-held properties and its interest in each of BP-TN Pte. Ltd., BP-SF Turbo LLP and BP-CA3 LLP (all three are known as the SPVs), being the holding entities of 10Tukang, 11SAL and Continental Building P3 respectively.

These are also known as the initial industrial properties.

The total valuation of Boustead Projects’ interest in the properties stand at $331.2 million.

The total consideration of the sale of the directly held properties and the company’s interests in the SPVs is $333.2 million inclusive of the Bombardier Aerospace Tranche 2 consideration, which comes up to $22.2 million.

The consideration of $333.2 million represents an excess of $206.9 million over the book value.

Assuming that the proposed transactions had been completed on March 31, 2020, Boustead Projects’ net tangible assets (NTA) would have been $431.2 million instead of $297.4 million. The company’s earnings per share (EPS) would have been 45.8 cents from the 7.2 cents posted.

Shares in Boustead Projects closed 0.5 cent lower or 0.6% down at 80.5 cents on Dec 31.