* Mapletree deal would be biggest REIT IPO in Singapore
* China-focused REIT to yield up to 6 pct in 2013-2014
* CBRE, AIA, Norway central bank among cornerstone investors
* IPO pricing set for Feb. 27, listing slated for March 7
By Elzio Barreto and Eveline Danubrata
HONG KONG/SINGAPORE, Feb 15 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
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 Feb. 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
Festival Walk is focused mostly on retail commercial space,
with tenants including Marks & Spencer, budget fashion
company Hennes & Mauritz and an Apple Inc
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
The Hang Seng REIT index in Hong Kong is up nearly
31 percent over the past year, while the FTSE Straits Times REIT
index 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
Cornerstone investors pledged to buy nearly $720 million
worth of units on offer. The 11 investors included Asian insurer
AIA Group, 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, DBS, Goldman Sachs and
HSBC were hired to manage the offering.