UPDATE 1-Singapore REIT IPO priced at top end, more deals to come

Wed Jul 17, 2013 4:59am EDT

* OUE's hospitality trust to price later in the day

* REITs in demand due to attractive yields

* At least two more Singapore REIT deals expected

By Anshuman Daga and S. Anuradha

SINGAPORE, July 17 (Reuters) - Singapore's IPO market got a boost after a property trust from Singapore Press Holdings Ltd priced at the top end of its indicative range on Wednesday, underscoring strong appetite for REITs from yield-hungry investors.

Hotel and property group Overseas Union Enterprise Ltd , which is backed by Indonesian tycoon Stephen Riady, is also set to price its $480 million hospitality trust later in the day.

Demand for REIT listings in Singapore is one of the brighter spots in Asia's IPO market which has been hurt by volatility and concerns about slowing growth in China, and industry players say more REIT deals are in the offing.

"We know of a number of deals which may potentially come out. So, I think the number of offerings remain on the table," said Lai Yeu Huan, head of equity research at Nikko Asset Management Asia.

Singapore Press Holdings said its REIT will raise S$504 million ($400 million) after selling 560 million units at 0.90 Singapore cents per share, the top of its indicative range of S$0.85-S$0.90.

But analysts also said offerings had to be realistically priced, noting that OUE had to cut its free float for its deal, and that the properties had to be attractive.

"Right now really, you have to offer deals with very well understood assets, assets which perhaps are very prominent in Singapore," Nikko's Lai said.

The Singapore Press Holdings' REIT includes the luxury Paragon Shopping Mall located in Singapore's Orchard Road, and Clementi Mall in the suburbs. The REIT and business trust from Overseas Union Enterprise includes the posh Mandarin Orchard hotel and Mandarin Gallery shopping mall on Orchard Road.

SPH has projected a yield of 5.79 percent for its 2014 financial year. The IPO lists on July 24.

Companies have flocked to Singapore to list REITs and business trusts, offering high dividends to attract high net-worth individuals as well as institutional and retail investors.

The two IPOs were launched after markets recovered from a selldown sparked by signals from the Federal Reserve that it could reduce its massive stimulus.

At least two more REIT listings are likely. IFR, a Thomson Reuters publication, reported that Singapore's Soilbuild Business Space REIT began premarketing on Wednesday for its S$500 million issue and Viva Industrial Trust REIT is expected to launch a S$400 million deal as early as September.

Citing company sources, Singapore's Today newspaper also reported this month that Thai billionaire Charoen Sirivadhanabhakdi is planning a REIT that could be valued at more than S$2 billion and include assets from Fraser and Neave and his own firms. An external spokeswoman for Charoen's group declined comment to Reuters.

Equity capital market deals in Southeast Asia jumped 54 percent to $22.5 billion in the first half of 2013, a quarter of all Asia-Pacific ex-Japan volumes. Stock offerings in Singapore, the Philippines and Indonesia more than doubled, data from Thomson Reuters shows.

OUE cut the free float for its hospitality trust amid adverse market conditions. It is retaining about a 48 percent stake compared to an earlier target of close to 30 percent. The trust is offering a projected yield of 7.30 percent to 7.46 percent for 2014.

Singapore's REIT sector index, which jumped nearly 37 percent last year, has fallen about 15 percent from a record struck in late April. All sectors have declined this year from their highs, but REITs are the worst performers. The broader market index is down 7 percent from the year's high scaled in late May. ($1 = 1.2596 Singapore dollars) (S. Anuradha is a reporter for IFR, Additional reporting by Saeed Azhar; Editing by Edwina Gibbs)

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