Manulife revives office Reit IPO plan

CANADIAN financial services group Manulife has started pre-marketing for an initial public offering (IPO) in Singapore of its US office Reit (real estate investment trust), a plan it had shelved for nine months due to market conditions.

It is now said to be aiming for a May 20 listing.

A report by FinanceAsia on Tuesday, which cited bankers familiar with the situation, said the deal could raise around US$500 million (S$670 million), slightly more than the previous S$569 million target.

Early indications also suggest the new deal will offer an annualised dividend yield of 6.5 to 7 per cent for 2017, at least 20 basis points higher than the last deal.

This time around, cornerstone investors could also take up a larger slice of 40 to 50 per cent of the IPO, up from 23.56 per cent in the last deal.

Manulife’s first attempt at listing the office Reit in July last year was botched by weak market demand amid the Chinese stockmarket rout and a potential Greece exit from the eurozone.

Under the revived deal, Manulife has removed M Street in Washington DC from its Reit portfolio and replaced it with a 28-storey Grade-A office building at 1100 Peachtree Street in Atlanta, Georgia. The other two assets in the new portfolio are two Grade-A office buildings, Michelson in Orange County and Figueroa in Los Angeles.

The inclusion of Peachtree effectively enlarges the new portfolio’s total net lettable area by 23 per cent to 1.8 million square feet, according to FinanceAsia’s report. Based on Colliers International’s estimates, the net asset value will be increased by 10.5 per cent to US$799 million.

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