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Steady demand for Manulife US Reit’s S$649m IPO

SINGAPORE — Manulife US Real Estate Investment Trust (Manulife US Reit), which will become Singapore’s first mainboard listing this year when it begins trading on Friday (May 20), has reported steady demand for its US$470 million (S$649 million) initial public offering.

SINGAPORE — Manulife US Real Estate Investment Trust (Manulife US Reit), which will become Singapore’s first mainboard listing this year when it begins trading on Friday (May 20), has reported steady demand for its US$470 million (S$649 million) initial public offering.

In a filing with the Singapore Exchange late on Thursday, Manulife US Reit, a unit of Canadian insurer Manulife Financial Corp, said its public offer of nearly 45.8 million units was 1.6 times subscribed, while a placement tranche of about 350.8 million units was also oversubscribed. The units were priced at the top of the indicated range at US$0.83 apiece.

Ms Jill Smith, chief executive officer of Manulife US Real Estate Management, said: “The IPO was well-received by institutional investors and we received good demand for the placement tranche from a good mix of long-only funds, multi-strategy funds and family wealth offices. We are also very happy with the support of retail investors for what is possibly one of the bigger public offers in Singapore in recent years.”

Cornerstone investors Oman Investment Fund, Fortress Capital Asset Management and certain private-banking clients of DBS Bank had also previously agreed to take up 169.5 million units.

Reits raise capital to purchase primarily real estate assets, usually established with a view to generating income for unit holders of the fund. This allows individual investors to access real property assets, and share the benefits and risks of owning a portfolio of properties, which typically distribute income at regular intervals through dividends.

Manulife US Reit’s IPO portfolio, valued at US$799 million, comprises three freehold office properties located in the US. It is the first pure-play US office Reit to be listed in Asia, and plans to offer an annualised distribution yield of 6.6 per cent this year and 7.1 per cent in 2017.

This is the second time Manulife US REIT is tapping the Singapore IPO market after having shelved plans last July, citing volatile conditions.

When it begins trading, Manulife US Reit will be the 30th Reit to list on the SGX

At present, five of SGX’s existing 29 Reits are categorised as office Reits. They are: CapitaLand Commercial Trust, Keppel REIT, Frasers Commercial Trust, OUE Commercial REIT and IREIT Global. The five Reits have all gained this year through May 16, with average total returns at 8.2 per cent.

The Manulife US Reit IPO comes at a slow time for the Singapore market.

Companies have raised only US$34.2 million from IPOs in Singapore this year, after 2015 saw the weakest year for listings in 17 years with US$432.6 million worth of deals, according to Thomson Reuters data.

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.

Manulife US Reit’s IPO is the largest here since Accordia Golf Trust’s S$758.6 million IPO in August 2014, and the first mainboard listing since BHG Retail Reit last December. Hutchison Port Holdings Trust, which listed in March 2011, remains Singapore’s largest IPO at US$5.5 billion.

Trading in the units begins at 2pm.

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