Manulife US Reit makes weak debut on SGX
Manulife Centre at 51 Bras Basah Rd. Photo: Robin Choo
SINGAPORE — Manulife US Real Estate Investment Trust (Reit) — the Republic’s first mainboard listing this year — closed below its initial public offer (IPO) price to make a weak debut on Friday (May 20), even as the broader index gained.
Compared to the IPO price of US$0.83 (S$1.15), the Reit opened at US$0.82 and fell to US$0.795 within the opening minutes before closing at US$0.79 on a volume of 42.67 million units. The ST index closed at 2,763.82, up 0.87 per cent.
“This does not come as a surprise,” said veteran investor Mano Sabnani. “It is a relatively large issue at a time when the market is not strong. Reit shares are sensitive to interest rates, and given the imminent Fed rate hike in June, investors may choose to ignore such a stock in favour of other alternative investments.”
Manulife US Reit is the Republic’s first mainboard listing this year, with the other five listings being on the junior Catalist board, and is also the market’s biggest IPO since Accordia Golf Trust’s US$611 million listing in August 2014.
The Reit arm of Canadian insurer Manulife Financial had dropped its listing plans in July last year, citing reduced investor appetite and volatile market conditions. The scrip is promoted as the first US office Reit to be listed in Asia, with a portfolio comprising three freehold office properties in the US with plans to offer an annualised distribution yield of 6.6 per cent this year and 7.1 per cent in 2017.
The IPO raised US$519.2 million. Its public offer of nearly 45.8 million units was 1.6 times subscribed, while an international placement tranche of about 350.8 million units was also oversubscribed, according to the Reit’s filings with the SGX.
Reits raise capital to purchase mainly real estate assets, usually established with a view to generating income for unit holders of the fund. This allows individual investors to access real property assets, and share the benefits and risks of owning a portfolio of properties, which typically distribute income at regular intervals through dividends.
In a statement, Manulife US Reit CEO Jill Smith said: “We look forward to providing our unitholders with resilient and stable distributions, embedded with strong organic growth.”
SGX head of Equities and Fixed Income Chew Sutat said that the listing underscored the local exchange’s “strengths as the leading Asian Reit hub with strong investor support and interest”. “This is the first SGX-listed Reit to be trading and paying distributions in US dollars, offering our investors a proxy to invest in the greenback, in addition to providing access to the commercial real estate market in the world’s largest economy,” he added.
The listing of Manulife US Reit brings the total number of SGX-listed Reits and property trusts to 40, with a combined market capitalisation of about S$67 billion.
