Temasek-backed Mapletree launches $1.3 billion record REIT IPO
HONG KONG/SINGAPORE (Reuters) - A real estate investment trust backed by Singapore state investor Temasek is betting on demand from yield-hungry investors to complete an up to $1.3 billion initial public offering, the largest ever IPO by a REIT in the city state.
Investors and bankers hope a successful offering by the REIT, Mapletree Greater China Commercial Trust, will be a harbinger for IPOs in Asia following a dismal 2012.
It will be the biggest IPO in Asia excluding Japan since the $3.1 billion listing of People's Insurance Company (Group) of China's (PICC) in late November, and comes ahead of some $2.5 billion of offerings for business trusts and REITs expected to take place in the coming months in Singapore.
"Overall it's quite attractive because of the strong sponsor, quality assets and yield," said Tan Siew Ling, an analyst at CIMB Research in Singapore. "Given the size of the deal, it will be closely watched because if it does well, it will give a positive signal to other players that might want to do similar IPOs."
Mapletree is offering about 1.73 billion units in a range of S$0.88-0.93 each, putting the total deal at up to S$1.6 billion ($1.3 billion), according to a prospectus of the IPO filed on Friday.
At that price range, the REIT has a projected yield of as high as 6 percent for the financial year ending in March 2014, and 6.5 percent in the following year, the prospectus said.
The projected returns compare with an average of 5.05 percent on retail REITs and 4.82 percent for office REITs listed in Singapore for the 12 months through the end of January, according to Asia Pacific Real Estate Association (APREA) data. In Hong Kong, retail REITs posted average yield of 4.6 percent, while office REITs had 5.46 percent in the same period.
"The yield is attractive and in line with what is being offered in the REIT space in Singapore," said Kristy Fong, an investment manager at Aberdeen Asset Management in Singapore. "Right now they have a few assets, but the management can pursue asset enhancement and there are potentially more assets that can be injected by the sponsor."
Pricing of the IPO is set for February 27, with trading on the Singapore stock exchange slated for March 7.
The Mapletree REIT will consist of office and retail developments in mainland China and in Festival Walk, an up-market shopping center in Hong Kong's Kowloon area. It is controlled by Mapletree Investments Pte Ltd, which is owned by Temasek.
Festival Walk is focused mostly on retail commercial space, with tenants including Marks & Spencer (MKS.L), budget fashion company Hennes & Mauritz (HMb.ST) and an Apple Inc (AAPL.O) store, but it also has a four-storey office tower. Mapletree's Gateway Plaza in Beijing targets mostly corporate tenants, with two 25-storey office towers.
The Mapletree REIT plans to use all the proceeds from the offering to help fund the purchase of Festival Walk and Gateway Plaza from its parent company. In addition to the IPO funds, the REIT is also taking out a HK$12.15 billion ($1.6 billion) loan from six banks, including the four underwriters of the IPO, to finance the purchase.
Other offerings by business trusts and REITs expected in the coming months in Singapore include an up to $700 million IPO for GE Commercial Aviation Services' Aircraft Capital Trust, and an up to $600 million deal by Japan-focused retail real estate company Croesus Retail Trust.
REIT listings in Asia rose 21 percent to $9.64 billion in 2012 from $7.97 billion in 2011, according to the APREA data.
By comparison, the number of IPOs in Hong Kong plunged 64 percent in 2012 from 2011, while new listings in Singapore dropped 41 percent over the same period, according to Thomson Reuters data.
The Hang Seng REIT index .HSREIT in Hong Kong is up nearly 31 percent over the past year, while the FTSE Straits Times REIT index .FTFSTAS8670 gained 35 percent over the same period, as investors flocked to the high-yielding securities to boost returns amid low global interest rates and volatile stock markets.
Cornerstone investors pledged to buy nearly $720 million worth of units on offer. The 11 investors included Asian insurer AIA Group (1299.HK), CBRE Clarion Securities and Norges Bank, the central bank of Norway.
Those investors agree to keep the shares for a fixed period of time in exchange for a guaranteed stake in the offering.
Mapletree's net property income, or revenue, for the seven months ended March 2012 totaled S$98.5 million, with total return for the period reaching S$54.3 million, according to the prospectus. Mapletree forecasts net property income to rise to S$185.7 million in the year ending in March 2014 and reach S$197.5 million the following year.
The REIT expects to distribute S$139.8 million to its unit holders in the 2014 financial year and S$153.2 million in 2015.
Citigroup (C.N), DBS (DBSM.SI), Goldman Sachs (GS.N) and HSBC (HSBA.L) were hired to manage the offering.
($1 = 1.2354 Singapore dollars)
($1 = 7.7546 Hong Kong dollars)
(Additional reporting by Daniel Stanton of IFR and Kevin Lim in Singapore; Editing by Michael Flaherty and Chris Gallagher)
NEW YORK - Stocks posted their largest drop in a month on Wednesday as traders locked in recent gains after a provisional budget deal out of Washington removed one of the near-term reasons for the Fed to keep up its current pace of economic stimulus.
WASHINGTON - U.S. small business sentiment bounced back from a seven-month low in November, with owners setting their sights on creating more jobs and expanding operations.
BEIJING/HONG KONG - China reiterated its opposition on Thursday to a European Union plan to limit airline carbon dioxide emissions and called for talks to resolve the issue a day after its major airlines refused to pay any carbon costs under the new law.