Overseas Union Enterprise Ltd., which is buying California’s tallest building, is seeking to raise as much as S$614 million ($481 million) for a real estate and business trust in Singapore.
The real estate company will offer 434.6 million shares to the public and institutions, and an additional 247.2 million to cornerstone investors at 88 Singapore cents to 90 Singapore cents apiece, it said in a prospectus filed with the city-state’s central bank. The trust, structured as a stapled security, will include a downtown Singapore hotel and mall.
OUE Hospitality Trust aims “to maintain and grow an investment portfolio of hospitality and hospitality-related assets primarily in Singapore, and to extend the portfolio to include other places where suitable opportunities arise,” it said in the prospectus.
REITs and business trusts were the biggest fundraisers in Singapore’s initial public offering market in the past year, raising $4.16 billion, or 67 percent, of the $6.2 billion of stock priced, according to data compiled by Bloomberg. Singapore Press Holdings Ltd. said yesterday it is seeking to raise as much as S$504 million in an initial stock sale of its retail assets.
OUE’s REIT will offer a yield of as much as 7.2 percent based on earnings projections for 2013, and 7.5 percent for 2014, it said in the document. Singapore Press, the newspaper publisher that owns the Paragon mall along the city’s shopping belt, said its REIT will offer a yield of as much as 6 percent based on fiscal 2014 projections.
OUE shares climbed 2.9 percent to S$2.85 at the close in Singapore, a three-week high.
The company has identified three properties, a business hotel next to the Singapore airport and two hospitality assets in China, which could be offered to the trust, according to the prospectus. The properties, which have a total valuation of S$413 million as at Dec. 31, could potentially double the number of hotel rooms owned by the trust, the document states.
Singapore’s property trusts, Asia’s second-worst performers this year, are well-positioned to weather an increase in interest rates as they diversify their funding sources, Australia & New Zealand Banking Group Ltd. said June 27. The average debt maturity of Singapore REITs has risen to four to five years from three years, it said.
The measure tracking REITs in Singapore fell 5.2 percent this year, compared with the 0.7 percent increase in the Singapore benchmark Straits Times Index.
OUE said earlier this year it’s buying the U.S. Bank Tower in Los Angeles, the tallest in the West Coast state, for $367.5 million as it expands beyond its base in Singapore.
OUE is controlled by Executive Chairman Stephen Riady, a son of Mochtar Riady, who controls Indonesia’s Lippo Group. Lippos’s businesses include real estate, financial services and food across Asia.
The share sale is managed by Credit Suisse Group AG, Goldman Sachs Group Inc. and Standard Charterd Plc.