Thursday 7 March 2013

Dividend Chaser on MGCCT jumps in 2013 Asia biggest IPO

Mapletree Greater China Commercial Trust, Asia’s biggest share sale this year, surged 11% on its first trading day as investors were attracted by returns higher than those of comparable properties.

The shares gained to $1.03 at the close of trading in Singapore after being offered at 93 cents apiece. The trust earlier rose as much as 12%. They started trading at 2 p.m. and were 29.5 times subscribed.

The property trust, including assets such as the Festival Walk shopping mall in Hong Kong, raised $1.6 billion. The offer price reflects a 5.6% yield for the year ending March 2014, compared with the 4.2% return for the Bloomberg Asia REIT Index.

“Investors are buying because of the attractive yield,” said Alan Richardson, a Hong Kong-based fund manager who helps oversee about $110 billion for Samsung Asset Management Co. “The REIT’s offered yield is higher than the average yield of Singapore REITs. And we shouldn’t forget that its assets are located in China where average yields are even lower.”

The trust is the fourth by Mapletree Investments Pte, a property unit of Temasek Holdings, Singapore’s state-owned investment company. Mapletree Industrial Trust and Mapletree Commercial Trust have advanced about 50% from their offer prices, while Mapletree Logistics Trust is up more than 70%, according to data compiled by Bloomberg.

Trusts have dominated Singapore’s IPO market in recent years as high-yielding assets gained popularity amid low interest rates.

Slowing Growth
A total of 30 REITs and property trusts were listed in the city-state with a combined value of $56 billion, making up 6% of the total market capitalization of stocks traded, Lawrence Wong, head of listings at the Singapore Exchange, said in a statement on Feb 27. “SGX also has the largest number of cross-border asset REITs in Asia,” he said.

Still, the share sale comes as China’s growth slows. Expansion in industries including retailing, transportation and banking was the slowest in five months in February, according to an official survey of purchasing managers on March 3. Gauges released March 1 pointed to manufacturing growth cooling.

Mapletree Greater China will include the Gateway Plaza office complex in Beijing, a sales document for the IPO showed.

The sale was the biggest IPO in Asia this year, followed by Nippon Prologis REIT Inc., which debuted last month in Tokyo, according to data compiled by Bloomberg. It is also the biggest for a real estate investment trust in Singapore, surpassing the previous offerings by Mapletree, the data shows.

Growing Distributions
“Our yield plus growth strategy through active asset management and asset enhancement initiatives together with potential acquisition growth in top-tier cities in Greater China, will enable stable and growing distributions to be made,” Cindy Chow, chief executive officer of Mapletree Greater China’s management company, said in a statement on March 5, referring to dividend payouts to investors.

Mapletree Greater China’s price also offers a 6.1% yield for the year ending March 2015, it said. CapitaRetail China Trust, an owner of Chinese shopping malls managed by Southeast Asia’s biggest developer, offers a 5.4% yield based on its share price, while Hong Kong’s Link REIT has a 3.3 return, data compiled by Bloomberg show.

“The REIT has a very clean structure and its shares are pushed up by positive market sentiment,” said Travis Seah, an equity analyst at Phillip Securities Pte in Singapore. “I expect them to stay at around the current price over the coming weeks.”

Cornerstone Investors
Singapore REITs have outperformed the city-state’s Straits Times Index this year, returning 5.3% compared with a 4.2% gain in the benchmark measure.

Mapletree Commercial Trust completed a US$754 million ($941 million) initial share sale in April 2011 and Mapletree Industrial Trust raised US$714 million in October the previous year. Mapletree Logistics Trust raised US$144 million in 2005.

Mapletree Investments will own about a third of its newest REIT after the sale.

About 953 million of the 1.7 billion shares were sold to so-called cornerstone investors, including AIA Group and Morgan Stanley. Also among cornerstone investors are Henderson Global Investors, Myriad Asset Management and Norges Bank Investment Management, which runs Norway’s sovereign wealth fund, according to the sales document.

Citigroup Inc., Goldman Sachs Group Inc., DBS Group Holdings and HSBC Holdings Plc managed the offer.



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