The float is the first dual listing of a REIT in Asia and will give Singaporean investors access to a high yielding global real estate portfolio while buying units and receiving distributions in local currency.
The listing is a bold and daring move for a company that only began operations in the region at the end of last year. ôWeÆve spent the last 12 months researching the market carefully,ö says the firmÆs Melbourne-based managing director, Craig Dunstan.
MacarthurCookÆs property securities fund was listed on the ASX in December 2004 and has a market capitalisation of around A$125 million. About 82% of the fund is invested in Australian property, 15% in the US, and the rest in Europe and New Zealand.
ôThis is the first time that a property fund has attempted a secondary listing in Asia,ö says Dunstan. ôWe think it will appeal to local retail and institutional investors because it will give them access to global assets that offer a higher yield than Singapore or Hong Kong property.ö
Dunstan says the fund pays a yield of 8.5% compared to the average yield of 5.5% paid by existing Singapore-listed REITs.
MacarthurCook will use the proceeds of the fundraising û expected to be about S$100 million û to reduce its debt facility and broaden its property portfolio.
But Dunstan says the fund wonÆt be buying property in Singapore. ôWe have a stated yield target of 8.5% and real estate in Singapore just doesnÆt pay these kinds of yields. We will be looking at emerging sectors and new markets such as Europe.ö
Dunstan says the capital raising, which is being underwritten by OCBC, is an important part of the firmÆs Singapore strategy. ôA lot of Australian companies with dual listings suffer from poor liquidity in their offshore market because there is such a big disparity between the sizes of the listings,ö he says.
ôOnce the capital raising is complete we will have about 60% of our unit holders residing in Australia and 40% in Singapore, so the register will be fairly evenly split. This should ensure reasonable liquidity in both markets.ö
Dunstan says he expects other Australian REITs will follow the same dual-listing path. ôInvestors like the security and ease of investing in their own stock market, and while this is new ground for Singapore, the SGX realizes that this is the next logical step in the development of its REIT market.ö
The listing is expected to be finalised by the end of July.