SPH to spin off Paragon, Clementi Mall into Reit

Media group Singapore Press Holdings (SPH) will be putting its retail malls, including the upmarket Paragon, into a billion-dollar real estate investment trust (Reit) here in what has been a keenly awaited listing.

Having received listing eligibility approval from the Singapore Exchange, the initial public offering (IPO) of SPH Reit could take place as soon as early July.

SPH Reit will be among the largest retail Reits listed here by asset value, said the media group. Other retail Reits include CapitaMall Trust which owns Tampines Mall and Junction 8.

SPH chief executive Alan Chan said the listing will benefit the group in various ways, including giving it funds to pursue growth opportunities and reducing debt.

He said at a media briefing: "This new business... will unlock and release capital from our retail properties back to the SPH Group, to allow us to explore new growth strategies across our investment property, media and other businesses."

SPH Reit is being set up to invest in a portfolio of income-producing real estate used mainly for retail purposes in Asia-Pacific as well as real estate-related assets.

Mr Chan noted that the Reit serves as an efficient platform for holding future investment properties. SPH will also be able to earn recurrent management fees.

It plans to declare a special dividend of 18 cents a share, once the IPO is completed.

Under the deal, SPH will sell Paragon and Clementi Mall to the Reit for $2.5 billion and $570.5 million respectively. After the Reit lists, SPH is set to retain a 70 per cent stake in the Reit. This will allow SPH shareholders to continue to benefit from the group's majority ownership of these quality properties through new revenue streams, Mr Chan said.

The pricing of the units in the IPO has not been confirmed but, assuming an offering size of around $540 million, this would make SPH Reit the third-largest IPO here this year after Mapletree Greater China Commercial Trust's $1.7 billion listing and Asian Pay Television Trust's offering of around $1.4 billion.

The setting up of SPH Reit is subject to SPH shareholders' approval at an extraordinary general meeting on June 18.

In mid-March, SPH said it was exploring setting up a Singapore-listed Reit. The news sent SPH shares surging to their highest levels in five years, with the counter jumping 8.4 per cent in the week to $4.52.

The SPH Reit spin-off listing has been keenly anticipated.

DMG analyst Joshua Low said: "SPH has been developing its property business over a number of years, so it's a natural step. By listing them (the properties), the company hopes to unlock some value."

On Monday, SPH shares closed two cents higher at $4.39, before the announcement was made.

alfoo@sph.com.sg

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