Orchard Road neighbours vie for funds

Orchard Road neighbours vie for funds

SINGAPORE - Some wags are dubbing the almost simultaneous listing of two new Reits next week as the battle of Orchard Road neighbours.

Their respective flagship properties are diagonally opposite each other along the famous shopping strip, both playing host to top-end fashion labels.

Other similarities are shared between SPH Reit and OUE Hospitality Trust as both vie for investor funds at nearly the same time.

SPH Reit boasts Paragon as its flagship property, while OUE Hospitality Trust features nearby Mandarin Orchard hotel and the Mandarin Gallery mall.

Their public listings are set to be just 24 hours apart; their launches, too, were a day apart. Both are similarly priced issues.

SPH Reit is 90 cents a unit and OUE Hospitality Trust is 88 cents apiece.

While the two listings are going public at the same time, fund managers and analysts say there is easily enough interest out there to absorb both issues, given the recent improvement in market sentiment.

Mr Terence Wong, co-head of research at DMG & Partners Securities, said: "Things seemed to have improved from last month. For now, the market seems relatively open enough for both issues and is not as edgy."

Mr Hugh Young, managing director of Aberdeen Asset Management Asia, said: "It is certainly not the easiest of times to raise funds, but things have bounced back a little."

Both IPOs have been attractively priced, with similar yields and valuations to their retail and hospitality trust peers.

The trusts will each face concentration risks. For instance, Paragon accounts for 80.8 per cent of SPH Reit's gross revenue.

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