Manulife is on course to complete a $470 million Singapore listing of its US office real estate investment trust at the second time of asking, giving S-Reit deal makers a welcome confidence boost after a prolonged period of market inactivity.
The Canadian financial services group failed at the first attempt in July last year but this time achieved much stronger traction with a slightly bigger deal, thanks to the higher yield on offer and the relatively calmer state of markets.
With just one initial public offering to Singapore's name last year, equity banker hopes in the Lion City could rest on Manulife US Reit opening the door to other international property trusts. While Germany's IReit Global, Japan's Croesus Retail Trust, and Accordia Golf Trust were among those to find a home in Singapore in 2013 and 2014, 2015 was more of a damp squib for the S-Reit sector as worries about a US interest rate hike intensified.
Final pricing for Manulife US Reit was settled Thursday at the highest end of Manulife's initial price guidance of $0.82 to $0.83, translating into a dividend yield of 7.1% for the 2017 financial year, or 80 basis points more than last time.
Sources familiar with the situation told FinanceAsia that the institutional portion of Manulife US Reit’s IPO was oversubscribed due to robust demand from a mix of long-only and multi-strategy funds, family offices, and private banking accounts. The final order book, which closed in late Asian hours on Wednesday, consisted of over 70 accounts.
As a result of the oversubscription in the institutional tranche, Manulife clawed back close to half of the 85 million units initially allocated to retail investors. On a post-shoe basis, the final institutional/retail spilt was revised to 88:12 from 80:20.
In terms of allocation, priority was given to anchor and long-only investors as well as family offices, according to one of the sources.
The institutional bookbuild ended Wednesday and was immediately followed by the Singapore public offering, which runs until May 18. The target listing date is May 20.
With Manulife US Reit edging closer to the finishing line, S-Reit deal makers have reason to get excited again after a largely inert 2015.
Last year the only new issue in the S-Reit space was from BHG Retail Reit, which owns a portfolio of shopping malls managed by Chinese operator Beijing Hualian Group. It was also Singapore's only IPO of 2015.
S-Reit specialists believe the market will be able to offer more diversified products with the addition of Manulife US Reit and Frasers Logistics and Industrial Trust, the Australian logistics and industrial portfolio of Singaporean property developer Fraser Centrepoint. It is looking to raise S$900 million ($657 million) from a Singapore listing later this year.
"We have seen a variety of assets being listed in the form of S-Reits in 2013 and 2014," one Singapore-based equity capital markets banker told FinanceAsia. "This year we will see more diversification in terms of geography [of the underlying assets]."
Singapore is currently home of 34 real estate investment trusts and business trusts, with assets ranging from residential and industrial properties to offices, shopping malls, data centres, and golf courses.