Soilbuild Business Space REIT (SBREIT), whose assets include business parks and industrial properties in Singapore, fell in the city-state’s biggest initial public offering since May, tracking declines in the broader market.
The shares opened at S$0.77 at 2 p.m. local time and dropped as much as 7.7 percent to S$0.72 compared with the IPO price of S$0.78 apiece. The REIT raised S$626.7 million ($494 million), offering 586.5 million units. Lim Chap Huat, co-founder of Soilbuild Group Holdings Ltd., the developer which partly owns the REIT, pledged to buy an additional 216.9 million units, according to a preliminary prospectus. The public offer was approximately 5.4 times subscribed, a company statement yesterday showed.
“I would attribute the decline to the market weakness today,” Tricia Song, an analyst at Barclays Plc in Singapore, said. “Soilbuild had a decent response to the IPO.”
Stocks in Asia fell with Singapore’s benchmark Straits Times Index dropping as much as 1.3 percent, while bond risk rose after an unexpected drop in U.S. jobless claims fueled speculation the U.S. Federal Reserve will cut stimulus. Property trusts in the island-state face refinancing risks when borrowing costs rise, which may force them to sell assets or shares to boost their funding, Fitch Ratings said in March.
Soilbuild REIT’s initial portfolio holds seven properties, comprising two business park developments and five industrial projects, with a net leaseable area of about 3 million square feet.
Of the estimated S$928.8 million raised from the IPO, the units subscribed by Lim and a term loan facility, S$820.5 million will be used to pay for Solaris business park, Eightrium @ Changi Business Park, Tuas Connection and West Park BizCentral, the company said in a statement yesterday. Another S$84.8 million will go toward repaying existing private-trust debt and the balance for the payment of IPO-related costs and working capital.
REITs and business trusts were the biggest fundraisers in Singapore’s IPO market in the past year, according to data compiled by Bloomberg. Soilbuild REIT offers a dividend yield of 7.7 percent based on projections for fiscal 2014. That compares with an average yield of 3.24 percent for the Straits Times Index.
Citigroup Inc., DBS Group Holdings Ltd. (DBS) and Oversea-Chinese Banking Corp. managed the offering.
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