OUE Hospitality Trust, which owns a Singapore downtown hotel and shopping mall, opened higher on its first day of trading in the island-state, supported by returns that exceed those of comparable properties.
The shares opened at 88.5 Singapore cents at 2 p.m. local time, 0.6 percent higher than the initial stock offering price of 88 Singapore cents apiece. The closed unchanged after swinging between gains and losses in the first 10 minutes of trading. The benchmark Straits Times Index fell 1.2 percent. Hospitality Trust sold 681.8 million units at the lower end of its price range.
Overseas Union Enterprise Ltd., which is buying California’s tallest building, raised S$600 million ($473 million) in the initial public offering of its hospitality and retail assets. OUE follows an IPO of retail assets owned by Singapore Press Holdings Ltd., which raised S$554 million after pricing at the top of the marketed range. SPH REIT jumped 9.4 percent in its trading debut yesterday and was unchanged today.
“Valuations are attractive,” Vikrant Pandey, a Singapore-based analyst at UOB Kay Hian Pte said.
REITs and business trusts were the biggest fundraisers in Singapore’s initial public offering market in the past year, accounting for $4.16 billion of the $6.2 billion of stock priced, according to data compiled by Bloomberg.
At 88 cents, OUE Hospitality Trust is offering a yield of 7.46 percent based on fiscal 2014 projections, according to a prospectus filed in Singapore. SPH’s yield is projected at 5.79 percent for 2014, based on the 90 Singapore cents IPO price.
A business hotel next to the Singapore airport and two hospitality assets in China, may be offered to OUE Hospitality Trust, according to the IPO 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, according to the document.
OUE is controlled by Executive Chairman Stephen Riady, a son of Mochtar Riady, who controls Indonesia’s Lippo Group. Lippo’s businesses include real estate, financial services and food across Asia. The company 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.
The share sale was managed by Credit Suisse Group AG, Goldman Sachs Group Inc. and Standard Chartered Plc.