Skip to main content

Advertisement

Advertisement

Manulife US Reit gives S’pore another try with S$644m IPO

SINGAPORE — The prevailing market adage is that investors should sell their stock holdings in May and go away, then return only in November. Manulife US Real Estate Investment Trust (Manulife US Reit), which is set to raise US$470 million (S$644 million) in its initial public offering (IPO) in Singapore after pricing the units yesterday at the top of the range at US$0.83 each, does not mind if investors do so — but only if they bag the IPO first.

Manulife Centre at 51 Bras Basah Rd. Photo: Robin Choo

Manulife Centre at 51 Bras Basah Rd. Photo: Robin Choo

SINGAPORE — The prevailing market adage is that investors should sell their stock holdings in May and go away, then return only in November. Manulife US Real Estate Investment Trust (Manulife US Reit), which is set to raise US$470 million (S$644 million) in its initial public offering (IPO) in Singapore after pricing the units yesterday at the top of the range at US$0.83 each, does not mind if investors do so — but only if they bag the IPO first.

“If I was thinking of selling and going away in May, what would I like and what would entice me to buy?” quipped Ms Jill Smith, chief executive officer of Manulife US Real Estate Management.

“This is a sleep-tight product. This is the ideal product to buy just before you go away this May. You can sleep safely with it because it has such stable qualities and when you come back you will have your distributions to look forward to,” she added.

Manulife US Reit, a unit of Canadian insurer Manulife Financial Corp, is offering about 566 million units in the IPO, subject to an over-allotment option, in its second attempt at a listing on the Singapore Exchange.

Cornerstone investors Oman Investment Fund, Fortress Capital Asset Management and certain private-banking clients of DBS Bank have agreed to take up 169.5 million units. The international placement consists of 350.8 million units, while the public tranche is expected to total about 45.8 million units, according to the prospectus filed with the Monetary Authority of Singapore yesterday.

Manulife US Reit shelved its IPO plans last July, citing volatile market conditions, but is confident the current timing is right.

“When we launched in the latter part of June in 2015, we hit the Grexit crisis and at the same time in the last week of June, there was some shakedown in the Chinese market and the markets came to a grinding halt. We were right in the teeth of that,” Ms Smith said.

In the months after, the markets continued to experience high volatility, caused in part by a dramatic fall in oil prices and uncertainty over the interest rate hike in the US.

“As we came into January and February, the volatility started abating and things became clearer in terms of interest rates as well ... Things started to settle down in the market ... We decided we didn’t want to wait any longer,” Ms Smith said.

Mr Bernard Aw, market strategist at online financial trading firm IG, said Manulife US Reit’s return clearly shows its confidence in the market.

“Market volatility has certainly come down a few notches so far this year, with risk sentiment evident from the recent rally in global stocks ... I expect strong demand for the IPO, should past experience in Keppel DC Reit and BHG Retail Reit be anything to go by. Both IPOs were fully subscribed.”

Manulife US Reit, the first pure-play US office Reit to be listed in Asia, plans to offer an annualised distribution yield of 6.6 per cent this year and 7.1 per cent in 2017.

“The yields are fairly attractive when you compare them with similar products. I believe Reits are still a popular stock class among dividend growth investors,” Mr Aw said.

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

If successful, the IPO would be 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.

The Manulife US Reit’s IPO portfolio, valued at US$799 million, comprises three freehold office properties located in the US. The IPO will close on May 18, with trading expected to begin on May 20.

Read more of the latest in

Advertisement

Popular

Advertisement

Stay in the know. Anytime. Anywhere.

Subscribe to get daily news updates, insights and must reads delivered straight to your inbox.

By clicking subscribe, I agree for my personal data to be used to send me TODAY newsletters, promotional offers and for research and analysis.