SPH files Reit prospectus, IPO likely to raise up to $554 million

SPH files Reit prospectus, IPO likely to raise up to $554 million
PHOTO: SPH files Reit prospectus, IPO likely to raise up to $554 million

MEDIA group Singapore Press Holdings (SPH) filed its preliminary prospectus for its retail mall real estate investment trust (Reit) yesterday with the listing widely expected later this month.

The prospectus, which was lodged with the Monetary Authority of Singapore, has ended speculation over the timing of the initial public offering (IPO).

The IPO is expected to raise between $523 million and $554 million, with an offer of 308.9 million units at between 85 and 90 cents each.

SPH will inject Paragon and Clementi Mall into the Reit for $2.5 billion and $570.5 million respectively. The IPO proceeds will be mainly used to acquire the properties, and for transaction costs and property-related expenses.

About 224.9 million units will be offered to institutional and large investors via a placement, while the public tranche will be around 84 million units.

Five prominent cornerstone investors have agreed to take up a separate total of 251 million units. These are insurer Great Eastern Life, Hong Leong Asset Management, Morgan Stanley Investment Management, British firm Newton Investment Management and Norges Bank, which manages the Norwegian Government Pension Fund Global, one of the world's largest sovereign wealth funds.

The Reit could have an annual yield of between 5.79 per cent and 6 per cent, based on projections for the 2014 fiscal year.

It plans to pay distributions every quarter, with the first payout covering the period from its listing date to Nov 30. This will be paid on or before Feb 27 next year.

SPH Reit's manager said in the prospectus that it offers investors exposure to a "high-quality retail property portfolio anchored by Paragon, one of Singapore's most iconic retail malls". It also provides a "unique exposure to Singapore's robust retail sector and strong health-care services sector through Paragon Medical".

It noted that both properties are strategically located with full occupancy. Paragon has had full committed occupancy for the last 10 years, while Clementi Mall had 100 per cent committed occupancy when it officially opened in May 2011 and maintained this in the 2012 fiscal year.

Key risks highlighted in the prospectus include Paragon accounting for 80.8 per cent of the Reit's gross revenue, and the possibility of increased competition from other properties.

The entity will be managed by SPH Reit Management, which was incorporated in March this year.

The Reit manager's chairman and independent director is Mr Leong Horn Kee, chairman of corporate advisory services company CapitalCorp Partners. The former Member of Parliament's experience includes being an executive director and chief operating officer of Far East Organisation, and chief executive of Yeo Hiap Seng and Orchard Parade Holdings.

Ms Susan Leng is the Reit manager's chief executive. Ms Leng was general manager of Capitol Investment Holdings, a company which won the tender to redevelop Capitol Theatre, Capitol Building and Stamford House into an integrated mixed-use development.

Reports late last month suggested that SPH might delay the Reit IPO due to weak market sentiment. The company responded then by saying it was "continuing to monitor market conditions and will make an announcement at the appropriate time".

alfoo@sph.com.sg


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