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Manulife US REIT seeks to raise up to S$632m in S’pore IPO

SINGAPORE — In a move expected to inject new life into the sluggish initial public offering (IPO) market in Singapore, Manulife US Real Estate Investment Trust (Manulife US REIT) is seeking to raise as much as US$470 million (S$632 million) in its second attempt at a listing here, which would be the largest such deal in the Republic in nearly two years.

The Manulife Financial Corporation office in Waterloo, Ontario, Canada. The initial portfolio of Manulife US REIT will comprise three office properties in the United States. Photo: Reuters

The Manulife Financial Corporation office in Waterloo, Ontario, Canada. The initial portfolio of Manulife US REIT will comprise three office properties in the United States. Photo: Reuters

SINGAPORE — In a move expected to inject new life into the sluggish initial public offering (IPO) market in Singapore, Manulife US Real Estate Investment Trust (Manulife US REIT) is seeking to raise as much as US$470 million (S$632 million) in its second attempt at a listing here, which would be the largest such deal in the Republic in nearly two years.

The company, a unit of Canadian insurer Manulife Financial Corp, plans to sell 566 million units at between 82 US cents and 83 US cents apiece, according to a draft prospectus filed with the Monetary Authority of Singapore yesterday. Of the units on offer, 169.5 million will be taken up by cornerstone investors, which include Oman Investment Fund, Fortress Capital Asset Management and certain private banking clients of DBS Bank. The balance will be offered to institutional investors and the public.

This is the second time Manulife US REIT is tapping the Singapore IPO market after having shelved plans last July, citing volatile market conditions. If successful, the IPO would be largest here since Accordia Golf Trust’s S$758.6 million IPO in August 2014, and the first above US$100 million since BHG Retail REIT last November, noted IG market strategist Bernard Aw.

“Since they are back on the market, it speaks volumes about how they view the market and economic conditions … The stock market was previously too unstable for them to do the IPO, but now they feel that the market sentiment has improved given that global stocks have rallied for a couple of months now. So they might think it’s more stable for them to go ahead with the IPO plans,” he said.

Manulife US REIT said in its filing it plans to offer a dividend yield of as much as 6.7 per cent this year and 7.2 per cent in 2017. This compares with the 6.3 per cent for 2016 it offered in the previous IPO attempt last year.

“Manulife US REIT’s dividends are higher than its fellow REITs, such as Keppel REIT and BHG Retail REIT. Attracting investors has become competitive in a low-rate environment, which could explain why Manulife is offering higher yields,” said Mr Aw.

If successful, the deal would also provide a boost to the Singapore IPO market. The Singapore Exchange (SGX) has struggled in recent years, losing its reign as the premier destination for IPOs in South-east Asia.

The SGX had the smallest haul of new share sales among the region’s four largest stock markets last year. Only 13 IPOs were listed on the SGX last year — just one on the mainboard and the other 12 on the junior board Catalist. This compares with the 30 IPOs in 2014, of which 12 were on the mainboard and 18 on Catalist.

At its earnings briefing last month, SGX CEO Loh Boon Chye said the bourse would continue to focus on core sectors, including REITs, offshore and marine, as well as healthcare, as it tries to create a flow of IPOs.

“Definitely this (Manulife US REIT’s IPO) will boost interest. An amount as big as theirs will help to profile the Singapore market once again. Hopefully this will help to push up interest and boost trading volume,” said Mr Aw.

The initial portfolio of Manulife US REIT will comprise three office properties in the US, with an aggregate net lettable area of about 1.8 million sqft. The prospectus states that Manulife US REIT — as the first pure-play US office REIT to be listed in Asia — “is poised to benefit from the recovery of the world’s largest economy”.

According to property consultancy Colliers International, 2015 was the strongest year for the US office market since the recession, with total investments rising 16 per cent from 2014 to reach US$146 billion. This momentum is expected to carry forward into 2016, with the US remaining “the safe haven of choice for foreign investment, as uncertainty remains across Europe and Asia”, said Colliers.

Manulife US REIT plans to start trading on the SGX on May 20. DBS, China International Capital Corp (Singapore), Credit Suisse (Singapore) and Deutsche Bank are arranging the sale.

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