Elite Commercial Reit debuts on SGX at £0.705, 3.7% higher than IPO price

THE Singapore bourse on Thursday saw its first main board debut of 2020, with Elite Commercial Reit opening at £0.705 - 3.7 per cent higher than the initial public offering (IPO) price of £0.68 or S$1.21 per unit.

It is the first real estate investment trust (Reit) denominated in the British pound to be listed in Singapore.

The UK-focused Reit began trading at 2pm on Thursday, and climbed £0.005 or 0.7 per cent to £0.71 as at 2.28pm.

The offer price of £0.68 per unit translates to a forecast distribution yield of 7.1 per cent for 2020 and 7.2 per cent for 2022.

It issued a total of 192.5 million units to raise gross proceeds of £130.9 million (S$233.4 million).

Some £101.9 million has been disbursed for the partial repayment of existing facility agreements or loans, £18.9 million for the redemption of some units held by private trust investors, and £8.3 million has been used to pay for transaction costs. The remaining £1.8 million is being held for working capital purposes, the Reit's manager said.

When the offer closed on Tuesday, applications for about 47.85 million units were received for the roughly 5.73 million units offered to the public in Singapore, representing a subscription rate of 8.3 times.

The retail tranche, however, represents just 5 per cent of the overall offering.

Its placement tranche was also 3.2 times subscribed by institutional investors and high-net worth individuals.

The Reit has an initial portfolio of 97 properties across the UK, of which 96 are freehold.

Some 99 per cent of its gross rental income stems from leases with the UK government, primarily DWP which is the largest public service department.

The Reit's manager said in its preliminary prospectus the Reit's portfolio provides "stable, recession-proof and Brexit-proof cash flows".

The Reit has assets under management of about £320 million and seeks to grow its portfolio over time through the potential development of undeveloped land in its portfolio, including a possible doubling in size of its Peel Park asset in Blackpool.

The Reit manager is 85 per cent held by Elite Partners Holdings (in which former Viva Industrial Trust founder Victor Song and construction and property firm Ho Lee Group have a stake), and 15 per cent by Sunway RE Capital.

Its sponsors - Singapore's Elite Partners Holdings, property and construction firm Ho Lee Group and a wholly-owned unit of Malaysian conglomerate Sunway Group - own about 20 per cent in the Reit vehicle post-IPO.

Prior to the IPO, Elite Commercial Reit had 139.7 million units in issue. It now has 332.2 million units in issue after the IPO.