Manulife US Reit prices Singapore IPO at top of range, translating to a projected 7.1% yield

MANULIFE US real estate investment trust (Manulife US Reit) has priced its Singapore initial public offer (IPO) at US$0.83 each - the top of the indicative price range which translates to a projected distribution per unit (DPU) yield of 7.1 per cent for FY2017.

According to the prospectus registered with the Monetary Authority of Singapore (MAS) on Thursday, 396.57 million units will be offered, subject to the over-allotment option.

The offer consists of an international placement of 350.78 million units to investors outside the US and a public tranche of 45.79 million units to the public in Singapore.

However, BT understands that due to the strong interest for the international tranche, about 50 per cent of the units from the retail tranche will be clawed back. As a result, the final international tranche will be 378.93 million units including over-allotment units, while the final retail tranche will be 45.79 million units.

According to a banker, interest came from a good mix of funds and family offices. The Reit has secured six cornerstone investors, including sovereign wealth fund Oman Investment Fund and Malaysian asset management company Fortress Capital Asset Management.

These cornerstone investors have entered into a separate subscription agreement to subscribe for 169.544 million units.

This is the second time that the company is tapping the Singapore IPO market, after failing to launch last year because of weak market conditions.

Credit Suisse AG, DBS Bank and Deutsche Bank are among the banks advising Manulife US Reit on the IPO.

The offer is expected to close on May 18, and trading is expected to start on May 20.