SPH REIT Rises in IPO Debut on Yield Attraction: Singapore Mover

SPH REIT, the owner of the Paragon mall along Singapore’s shopping belt, gained on its first day of trading as investors were attracted by returns higher than those of comparable properties.

The shares jumped 9.4 percent to 98.5 Singapore cents at the close of trading. The stock was offered at 90 Singapore cents apiece, the top end of its price range. They started trading at 2 p.m. Singapore time and were 37 times subscribed.

“It was super oversubscribed as bond yields have stabilized a bit of late, which helped investor interest pick up,” Vikrant Pandey, a Singapore-based analyst at UOB Kay Hian Pte said. “Also retail assets are considered more of a defensive play so thats helped generate interest too.”

Shares of the real estate investment trust were offered with a yield of 5.79 percent based on fiscal 2014 projections. That’s higher than the measure tracking REITs in Singapore, which trades with a yield of 4.76 percent, according to data compiled by Bloomberg.

Singapore Press Holdings Ltd., the city’s biggest publisher, raised S$554 million ($438 million) in the initial public offering of its retail assets through the REIT. SPH REIT sold 615.8 million units, offered at 85 Singapore cents to 90 Singapore cents each.

The REIT was competing for funds with an offering by property company Overseas Union Enterprise Ltd. that includes a downtown Singapore hotel and mall. Both offerings were subscribed as investors sought high-yielding assets, where trusts have been the most active fundraisers in Singapore in the past year. REITs and business trusts raised $4.16 billion, or 67 percent, of the $6.2 billion of stock priced, according to data compiled by Bloomberg.

Higher Yield

Overseas Union, which sought as much as S$614 million for its REIT and business trust, will offer a yield of as much as 7.5 percent based on earnings projections for 2014, it said this month. OUE Hospitality Trust will start trading tomorrow.

SPH REIT sold units to key investors including Great Eastern Life Assurance Co. and Morgan Stanley Investment Management Co., it said in its prospectus.

The Paragon mall counts Prada, Gucci and Jimmy Choo among its tenants. The trust also holds the Clementi Mall in a western Singapore suburb.

Singapore Press said in May it will hold about 70 percent of SPH REIT after it goes public, and the proceeds will fund the group’s growth and a special dividend.

Credit Suisse Group AG, DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp. managed the sale.

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