SPH prices Reit at top end of range to raise $504m

PHOTO: SPH prices Reit at top end of range to raise $504m

SINGAPORE - Red-hot investor response has prompted Singapore Press Holdings (SPH) to launch the listing of its retail mall real estate investment trust (Reit) at the top end of the indicated price range.

SPH Reit will feature 308.9 million shares at 90 cents each in the initial public offer (IPO), raising a total of $504 million. The indicative price range was 85 to 90 cents.

The IPO includes 224.9 million units to be offered to institutional and large investors via a placement, with 84 million units earmarked for the public tranche.

A separate block of 251 million units will go to five prominent cornerstone investors, who have committed to paying $226 million in total.

SPH is injecting Paragon Mall into the trust for $2.5 billion and Clementi Malls for $570.5 million.

SPH Reit Management chief executive Susan Leng told a briefing that the final prospectus was registered on Wednesday with the Monetary Authority of Singapore for a mainboard listing.

"This follows a week of successful roadshow meetings where we have received strong indications of interest from institutional investors during bookbuilding," added Ms Leng.

This interest amounted to about 42 times the number of available placement units, she said.

SPH chief financial officer Tony Mallek said: "When you get 42 times coverage, it's sort of hard not to price it at the upper end."

The public offer opened at 6pm on Wednesday and will close at noon on Monday, with trading set to begin at 2pm on Wednesday, July 24.

At 90 cents, SPH Reit is expected to have an annual yield of 5.79 per cent, based on projections for the 2014 fiscal year, which will run from Sept 1 to Aug 31 next year.

It also represents a forecast annual yield of 5.58 per cent for the second half of the 2013 financial year, which lasts from March 1 to Aug 31.

Analysts said the projected yield compares well to those of other retail mall Reits, such as CapitaMall Trust and Frasers Centrepoint Trust.

SPH Reit 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.

The Reit will be anchored by Paragon, an upscale Orchard Road mall with famous fashion brands such as Prada and Gucci among its tenants. It is also home to more than 60 medical and dental specialists and offices, and so offers investors exposure to Singapore's strong health-care services sector.

Clementi Mall is a mid-market suburban shopping centre featuring familiar brands such as BHG Department Store and Fair- Price Finest.

Ms Leng said the malls, which are fully occupied, had a total of 45 million visitors last year.

The swift timing of the IPO surprised a few analysts, who had expected it to take place in August, although they added that it was attractively priced.

Maybank Kim Eng analyst Wei Bin told The Straits Times: "The IPO is taking place earlier than we expected. The Reit pricing is quite attractive and is positive for the company."

SPH shares closed two cents lower at $4.27 on Wednesday.

News of the SPH Reit launch comes even as property giant Overseas Union Enterprise (OUE) appears likely to launch the IPO of OUE Hospitality Trust, which features the Mandarin Orchard hotel and the Mandarin Gallery mall, this week.


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