Prime launches third Singapore Reit securitization

Prime hopes to follow in the footsteps of Suntec and A-Reit''s Euro success.

Joint leads HSBC and Standard Chartered will begin roadshows next week for an Eu190m (S$380 million) commercial mortgage-backed securitization (CMBS) for Prime real estate investment trust with pricing slated for September 8.

The deal will mark the first offering from Prime and the third international Reit securitization out of Singapore so far this year following the success of Suntec and A-Reit.

Prime's transaction, issued via SPV Orion Prime Limited, will have an FRN structure with an expected maturity of five years and a legal maturity of 6.5 years. It will be secured by Wisma Atria and Ngee Anne City, 2 Prime owned Singapore-based retail properties.

Earlier this year, retail mall operator Suntec City and industrial property manager Ascendas came to market with Eu320 million and Eu165 million deals, respectively.

Suntec's Platinum AC1 deal had a five-year maturity and aggressive launch spread of 16bp over Euribor. At the time this represented an extremely slim premium of only 2bp over similarly rated European credits such as Prologic, which had just come to market before it with an Eu389 million deal.

At 23bp, Ascendas' A-Reit deal came 7bp wider than Suntec's but markets had noticeably weakened in that time. Indeed, A-Reit's spread represented only a 3bp premium over a similarly rated Society General CMBS - a six-year ST400 million offer via SPV White Tower 2005-1 Plc.

Prime's challenge will be to achieve a similarly tight pricing differential. As yet there is no public price guidance, but the issuer will likely look to price the deal in-line with comparable Euro paper currently trading in the low to mid 20's range.

The deal will be supported by the fact that Singapore's burgeoning Reit securitization sector is beginning to gain real traction with European investors who are now very familiar with the credit story. Fitch and Moody's have given the notes a preliminary AAA rating.

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