SINGAPORE - Overseas Union Enterprise (OUE) launched its hospitality trust on Thursday at an auspicious-sounding price of 88 cents, or the bottom end of the indicated price range.
The property giant is selling 434.6 million stapled securities via an initial public offering (IPO) of OUE Hospitality Trust to raise about $600 million. The indicated price range was 88 to 90 cents.
"We are pricing it at the lower end, leaving enough on the table for the investors," said Mr Chong Kee Hiong, OUE Hospitality Reit Management chief executive, during a briefing. "Eighty-eight cents is also a very prosperous number," he added.
The number 88 is regarded as auspicious in Chinese culture.
OUE registered its final prospectus for a mainboard listing of the trust with the Monetary Authority of Singapore on Thursday.
Mr Chong added that the placement tranche of around 383.5 million stapled securities was about two times subscribed. Some 51.1 million units will be available to retail investors. A separate block of 247.2 million units will go to five cornerstone investors who have committed to paying $218 million in total.
At 88 cents, OUE Hospitality Trust is forecast to have an annual yield of 7.15 per cent, based on projections for the 2013 financial year ending Dec 31. The trust will also have a forecast annual yield of 7.46 per cent for the 2014 financial year.
OUE Hospitality Trust comprises stapled securities from the OUE Hospitality Real Estate Investment Trust (Reit) and OUE Hospitality Business Trust.
The Reit will initially hold two assets in Orchard Road - the Mandarin Orchard hotel and the Mandarin Gallery mall.
The public offer opened at 6pm on Thursday and will end at noon on Tuesday, July 23. Trading is expected to begin on Thursday, July 25, at 2pm.
OUE shares closed 3 cents lower at $2.85 on Thursday. The OUE Hospitality Trust offering came a day after Singapore Press Holdings launched the listing of its retail mall Reit to raise a total of $504 million.
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