Mapletree Greater China Commercial Trust, Asia’s biggest share sale this year, was 29.5 times subscribed as assets including the Festival Walk shopping mall in Hong Kong offered higher returns than comparable properties.
The property trust, which starts trading in Singapore at 2 p.m. local time tomorrow, raised S$1.6 billion ($1.3 billion) offering shares at 93 Singapore cents apiece. The price reflects a 5.6 percent yield for the year ending March 2014, compared with the 4.2 percent return for the Bloomberg Asia REIT Index.
“The REIT has an attractive yield compared to other REITs with assets in Hong Kong or China,” said Vijay Natarajan, a Singapore-based analyst at UOB-Kay Hian Pte. “Mapletree is a trusted brand with a strong track record and its last REITs have done well.”
The trust is the fourth by Mapletree Investments Pte, a property unit of Temasek Holdings Pte, Singapore’s state-owned investment company. Mapletree Industrial Trust and Mapletree Commercial Trust have advanced about 50 percent from their offer prices, while Mapletree Logistics Trust is up more than 70 percent, according to data compiled by Bloomberg.
Trusts have dominated Singapore’s IPO market in recent years as high-yielding assets gained popularity amid low interest rates.
A total of 30 REITs and property trusts were listed in the city-state with a combined value of S$56 billion, making up 6 percent of the total market capitalization of stocks traded, Lawrence Wong, head of listings at the Singapore Exchange Ltd., said in a statement on Feb. 27. “SGX also has the largest number of cross-border asset REITs in Asia,” he said.
Still, the share sale comes as China’s growth slows. Expansion in industries including retailing, transportation and banking was the slowest in five months in February, according to an official survey of purchasing managers on March 3. Gauges released March 1 pointed to manufacturing growth cooling.
“The REIT’s properties are located in some of the best shopping and business areas in Chinese cities, which are offering strong growth prospects even with the economy showing signs of weakness,” said Tata Goeyardi, a Singapore-based analyst at Religare Capital Markets. “The REIT offers an attractive yield.”
Mapletree Greater China will include the Gateway Plaza office complex in Beijing, a sales document for the IPO showed. The sale was the biggest IPO of a real estate investment trust in Singapore, surpassing the previous offerings by Mapletree.
“Our yield plus growth strategy through active asset management and asset enhancement initiatives together with potential acquisition growth in top-tier cities in Greater China, will enable stable and growing distributions to be made,” Cindy Chow, chief executive officer of Mapletree Greater China’s management company, said in a statement late yesterday, referring to dividend payouts to investors.
Mapletree Greater China’s price also offers a 6.1 percent yield for the year ending March 2015, it said. CapitaRetail China Trust, an owner of Chinese shopping malls managed by Southeast Asia’s biggest developer, offers a 5.4 percent yield based on its share price, while Hong Kong’s Link REIT has a 3.3 return, data compiled by Bloomberg show.
Singapore REITs have outperformed the city-state’s Straits Times Index this year, returning 5 percent compared with a 3.8 percent gain in the benchmark measure.
Mapletree Commercial Trust completed a $754 million initial share sale in April 2011 and Mapletree Industrial Trust raised $714 million in October the previous year. Mapletree Logistics Trust raised $144 million in 2005.
Mapletree Investments will own about a third of its newest REIT after the sale.
About 953 million of the 1.7 billion shares were sold to so-called cornerstone investors, including AIA Group Ltd. and Morgan Stanley. Also among cornerstone investors are Henderson Global Investors Ltd., Myriad Asset Management Ltd. and Norges Bank Investment Management, which runs Norway’s sovereign wealth fund, the sales document showed.
Citigroup Inc., Goldman Sachs Group Inc., DBS Group Holdings Ltd. and HSBC Holdings Plc managed the offer.