Elite Commercial Reit IPO's public offer oversubscribed

ELITE Commercial Reit's bet to launch its initial public offering (IPO) amid market uncertainty may have paid off, as its units were oversubscribed under the public offer. 

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 retail and placement tranches, together with the cornerstone units - the latter mostly taken up by private banking and wealth management clients of UBS, Bank of Singapore and CIMB - will raise gross proceeds of about £130.9 million in all.

Marking the Singapore Exchange's first Mainboard listing of the year, trading of the units is expected to start at 2pm on Thursday. 

Elite Commercial Reit launched its IPO last Tuesday, pricing its units at £0.68 or S$1.21 per unit, which will translate to a forecast distribution yield of 7.1 per cent for 2020 and 7.2 per cent for 2021.

Distributions will be declared in British pounds, and unitholders will receive their distributions in Singapore dollars equivalent of the amount declared in pounds. Unitholders can also choose to receive the entire distribution in pounds. 

The Reit has assets under management of about £320 million currently 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. The sponsors will own about 20 per cent in the Reit vehicle post-IPO.

"Going forward, we will focus on harnessing the Reit's growth potential from acquisition, enhancement and redevelopment opportunities to generate sustainable long-term distribution growth for our unitholders," said Shaldine Wang, CEO of the manager.