OUE Prices Hospitality Trust IPO at S$0.88 to Raise S$600 million

OUE Prices Hospitality Trust IPO at S$0.88 to Raise S$600 million
by Admin on Jul 18, 2013 • 7:41 pm

by Ernie B. Calucag

Singapore property firm Overseas Union Enterprise Ltd (OUE) has priced Thursday the initial public offering of its hospitality and retail assets at S$0.88 per stapled security, at the low end of the indicative range of S$0.88 to S$0.90 each.

According to the prospectus, OUE Hospitality Trust will offer 434,598,000 stapled securities, consisting of an international placement of 383,462,000 stapled securities and 51,136,000 stapled securities to the public in Singapore.

The offer also includes 247,220,000 stapled securities to cornerstone investors such as Credit Suisse AG, Goldhill, Mr Gordon Tang, Lucille Holdings Pte Ltd and Splendid Asia Macro Fund.

OUE Hospitality Trust is expected to raise S$600.0 million from the offering. At S$0.88 each, the trust is offering a yield of 7.46 per cent based on fiscal 2014 projections, according to the prospectus.

The trust will comprise a real estate investment trust and a business trust. OUE said it will initially inject two assets in the trust- the Mandarin Orchard hotel and the Mandarin Gallery mall along Orchard Road.

Also, a business hotel next to Changi 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$413.0 million as at 31 December 2013, could potentially double the number of hotel rooms owned by the trust, according to the document.

Led by Indonesian tycoon Stephen Riady, OUE revived plans for the REIT listing soon after it lost the battle to buy Fraser and Neave to Thai billionaire Charoen Sirivadhanabhakdi.

OUE also owns hotel properties outside Singapore, including Meritus Pelangi Beach Resort & Spa Langkawi in Malaysia and Meritus Mandarin Haikou and Meritus Shantou in China.

The share sale was managed by Credit Suisse Group AG, Goldman Sachs Group Inc. and Standard Chartered Plc.

The retail tranche of the offering opens Thursday while listing will be on July 25.

OUE’s IPO follows that of media group Singapore Press Holdings (SPH)’s REIT offering, priced at S$0.90 per unit Wednesday.

SPH said the final price, at the top end of the indicated range, was settled after seeing strong institutional investor response during the bookbuilding process, amounting to approximately 42 times the number of units offered under the placement tranche.

The media group is expected to raise S$504.0 million on offering of 308.9 million units to institutional and public investors, and 251 million units to cornerstone investors such as Great Eastern Life Assurance Company, Hong Leong Asset Management and Morgan Stanley Investment Management Company.

At S$0.90 per unit, SPH REIT offers a yield of 5.58 per cent and 5.79 per cent for the forecast period 2H2013 and projection year 2014, respectively.

The SPH REIT’s assets will include the luxury Paragon mall in the prime shopping district of Orchard Road and the suburban Clementi Mall.

REITs and business trusts were the biggest fundraisers in Singapore’s initial public offering market in the past year, accounting for US$4.16 billion of the US$6.2 billion of stock priced, according to data compiled by Bloomberg.

The biggest share sale was the S$1.6 billion raised by Mapletree Greater China Commercial Trust, a REIT that owns assets including the Festival Walk shopping mall in Hong Kong and an office complex in Beijing.

The citystate lists 23 REITs and is the largest REIT market in Asia ex-Japan. Singapore-listed REITs have a combined market capitalisation of S$52.0 billion. Together the 23 REITs provide a diverse mix of local and international property assets that house industrial, commercial, retail, residential and specialised tenants.

More good news coming?
 
- wong chee tat :)