Fayval Williams ... still tabulating the take-up of the offer. - File

Issuers of the real estate IPO said Thursday that they were still tabulating the take-up of the offer, but Financial Gleaner sources are already saying that the placement appeared not to have done well.

The Carlton Savannah REIT closed a week ago on June 13, after a two week extension, but a big issue for investors, according to brokers, was the price.

It was too expensive, said analysts who spoke with the Financial Gleaner on condition of anonymity.

The IPO was priced at $5.91 per common share, and targeted to raise $17.4 billion to finance acquisition of 16 apartments at the luxury resort Carlton Savannah Hotel in Trinidad.

At least three brokerages had recommended the new offer to the market as a buy.

With the use of two pricing and valuation methods, NCB Capital Market lead broker on the issue supported the offer price of $5.91, and deemed the IPO a sound investment.

Christopher Chin-Loy, head of Scotia DBG Investment, at the time the offer was on the market, had said the price seemed high, but that the instrument would likely suit investors in the market for hedging instruments.

Not educated

Financial Gleaner sources say the market was not educated enough on REITs and their benefits, and were cautious about exposing themselves to an investment they did not understand.

"Given that it is a new product to the market, people are still trying to digest the structure of the REIT, and how exactly it is beneficial to them," said one broker.

"It is a product that needs continuous education," said one analyst.

Fayval Williams, a partner in Williams and Associates, creators of the IPO, said they were still in the process of collating the figures, the details of which would, she said, be released shortly to the Jamaica Stock Exchange and the public in short order.

The shares taken up are to be listed on the exchange.

One of the immediate concerns is disclosure of information pertinent to the real estate assets on which the REIT is securitised.

"We have looked at how best to have more disclosure on the REIT and as such two forms of submission will be made," said JSE general manager Marlene Street-Forrest.

While the Carlton Savannah REIT will be listed and must follow the rules for filing of reports and information, the Trinidad hotel itself does not.

But the JSE will require that the management company, that is the company operating the hotel, submit their financial statements on a quarterly basis so that investors can track the Carlton Savannah hotel's performance.

sabrina.gordon@gleanerjm.com

Taken from the Financial Gleaner, Friday June 20, 2008.