Singapore to launch its largest REIT IPO

The stage has been set for Singapore’s largest initial public offering of a real estate investment trust (REIT).

Mapletree Greater China Commercial Trust has locked in a top price of 93 cents a share for its IPO, and it will raise up to S$1.7 billion from the listing.

The offering is Singapore’s largest IPO in two years, since Hutchison Port Holdings Trust raised US$5.5 billion in March 2011. It is also the first-ever REIT with commercial properties in both China and Hong Kong.

The Temasek-linked trust will offer about 776.6 million shares, of which nearly 265.4 million will be available to the public.

The REIT will use the proceeds to help buy two buildings — the Festival Walk retail and office development in Hong Kong and the Gateway Plaza office building with a retail atrium in Beijing.

It will also draw HK$12.15 billion from its unsecured term loan facility to fund the cost.

The IPO portfolio has a total valuation of S$4.3 billion and covers an aggregate gross floor area of about 2.4 million square feet. As of 30 November 2012, there was about 99 per cent committed occupancy.

Mapletree expects the China-focused trust to yield 5.6 per cent in its first year and 6.1 per cent in FY2014-2015.

The offering price had been floating between 88 and 93 cents a share, but strong demand and a strong returns in its other REITs helped lock it at the high end of the range.

This is Mapletree’s fourth REIT IPO, and tops its two closest offerings. Mapletree Commercial Trust which raised S$949.5 million in April 2011 and Mapletree Industrial Trust which raised S$1.19 billion in October 2010.

Eleven cornerstone investors have already committed about S$887 million to the trust.

Mapletree, a real estate unit of Temasek Holdings, will own 32 per cent of the REIT after the sale.

Cindy Chow Pei Pei, the CEO of Mapletree Greater China Commercial Trust, said: “I think if you look at the market now, it’s really an environment where it’s really low interest rates and also there is a lot of liquidity in the markets still.

“So we do see a lot of investors looking for very strong yield plus growth vehicles and there is still a lot of demand for good quality assets that generate very good yields. So I think in terms of the Mapletree Greater China Commercial Trust offering, we do meet that demand from investors.”

The IPO is open from Thursday and the REIT will start trading on the Singapore Exchange on March 7.

Source : Channel NewsAsia – 27 Feb 2013

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