REIT listings heat up S’pore IPO market

Companies are again rushing to list real estate and other assets in Singapore, with billions of dollars in deals that are putting the city-state on track for its best year for initial public offerings.

The firms are listing in the form of trusts, which investors find attractive because they pay high returns and assured dividends. In the past week, two real estate investment trusts (REITs) raised more than S$1.1 billion in Singapore IPOs.

An additional S$5 billion of trust deals are in the pipeline as companies ranging from department-store operators to wind-power providers look to capitalise on the market’s recovery.

Last week, Singapore-listed property developer Overseas Union Enterprise, controlled by Indonesia’s Riady family, listed hotel and shopping-mall assets in a REIT after raising S$600 million in an IPO. The day before, publishing and property company Singapore Press Holdings listed a REIT of its shopping malls after raising S$554 million.

Other companies are following suit. Among them, Lotte Department Store, South Korea’s largest department-store operator, plans to list some of its shopping mall assets in Singapore in a deal that could raise US$1 billion (S$1.27 billion), people with knowledge of the deal said last week. Lotte yesterday confirmed its IPO plan but said it had not decided on the timing.

MBK Partners, an Asia-focused private-equity firm that controls Taiwan’s largest cable television operator, China Network Systems, will also seek to raise around US$1 billion by listing it as a business trust, those with knowledge of the deal said last week. MBK yesterday declined to comment.

Singapore-listed developer Soilbuild Construction, meanwhile, has started taking orders from institutional investors for a S$643-million IPO of its industrial properties, those with knowledge of the deal said. It filed its prospectus with the Monetary Authority of Singapore on Tuesday.

If all the deals in the pipeline are completed, Singapore is likely to surpass its previous record for IPO volume of S$9.1 billion in 2011.

The success of last week’s listings, with shares trading above their IPO prices yesterday, indicates that many investors still see REITs as attractive despite concerns about monetary stimulus being scaled back in the United States, which was largely behind the sell-off in May and June.

Source : Today – 2 Aug 2013

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