Domus Delays U.S. Housing Fund IPO as Asian Investors Withdraw
Domus U.S. Multifamily Real Estate Fund (DMS), which plans to invest in U.S. housing, extended the application deadline for its Australian initial public offering after Asian institutional investors withdrew or reduced orders for the new shares.
The fund will delay the closing date for its capital raising for a second time to July 5 from its initial plan for May 31, said Chief Executive Officer Robert Geringer. It also expects to reduce the minimum amount it seeks to raise from the current A$80 million ($76 million), he said, declining to specify an amount.
“When the Nikkei fell very hard, some of the Asian investors backed out or reduced their orders,” Los Angeles-based Geringer said in a telephone interview today. “Particularly when the Australian dollar fell pretty hard during that time, it made some of the people question what was going to happen in the world economy.”
Japanese stocks on May 23 slumped the most since the aftermath of the March 2011 tsunami as government bond yields climbed and the Chinese economy showed signs of slowing. The Australian dollar has fallen 10 percent from a 2013 high of $1.0598 on Jan. 10 and was at 95 U.S. cents as of 12:46 p.m. today amid concerns of a decline in demand for commodities and investor expectations that the U.S. central bank may slow stimulus.
Domus, which had received applications for more than A$70 million as of May 24, saw that amount fall as investors backed out, Geringer said. The fund may lower the minimum amount it is seeking to raise as many of the Asian institutions who withdrew their offers are unlikely to return, he said.
Domus was seeking as much as A$100 million, with shares priced at A$1 each, it said on May 8. Applicants would receive one option for every four shares they were allotted, exercisable at A$1 at any time from Jan. 1, 2014 to the third anniversary of Domus’s listing, it said then.
The S&P/ASX 200 REIT index has lost 6.5 percent in the past month, compared with a 13 percent gain in the first four months of the year.
“The opportunity still exists when the Australian dollar is at 95 cents, because everybody thinks it’s going lower, not higher,” Geringer said. “We delayed it for a week to see how things went and now we have decided to delay till the 5th of July to give it a little bit more time.”
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