OUE seeks up to S$614m in Singapore REIT listing

Overseas Union Enterprise, a Singapore-listed property firm controlled by Indonesia’s Riady family, is seeking to raise up to S$614 million by listing a hospitality real estate investment in Singapore, according to a prospectus for the deal.

The company will offer 434.6 million shares to the public and institutions, and an additional 247.2 million to cornerstone investors at S$0.88 to S$0.90 apiece, it stated.

The initial portfolio for the trust, structured as a stapled security, comprises five-star Mandarin Orchard hotel and the adjoining Mandarin Gallery shopping mall.

OUE Hospitality Trust aims “to maintain and grow an investment portfolio of hospitality and hospitality-related assets primarily in Singapore, and to extend the portfolio to include other places where suitable opportunities arise,” it said in the prospectus.

It added that it had secured five cornerstone investors, including Credit Suisse, Singapore-based invested holding company Lucille Holdings and Cayman Island-registered fund Splendid Asia Macro Fund.

REITs and business trusts were the biggest fund-raisers in Singapore’s initial public offering market in the past year, raising 67 per cent of the US$6.2 billion (S$7.9 billion) of stock priced, according to Bloomberg data.

The announcement by OUE comes a day after Singapore Press Holdings filed its prospectus to raise up to S$504 million in an initial stock sale of its retail assets.

The two planned IPOs indicate that companies are gaining confidence in their ability to tap the equities market, which faced a severe sell-down last month after the United States Federal Reserve said it may start winding down its bond-buying programme later this year.

OUE Hospitality had previously delayed its IPO due to weak markets.

The announcement also comes as OUE, stung by its recent failure to buy out Singaporean conglomerate Fraser and Neave, seeks to diversify its predominantly Singaporean portfolio with acquisitions in US cities, such as New York, Los Angeles and San Francisco.

In March, the company bought the US Bank Tower, the tallest building in Los Angeles and some related properties for US$367.5 million.

OUE’s REIT will offer a yield of up to 7.2 per cent, based on earnings projections for 2013, and 7.5 per cent for 2014, it said in the prospectus. This compares with SPH’s REIT, which will offer a yield of as much as 6 per cent, based on fiscal 2014 projections.

Credit Suisse, Goldman Sachs and Standard Chartered are joint global coordinators and issue managers for OUE’s REIT.

Source : Today – 11 July 2013

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