Far East REIT marketing $703m Singapore IPO

Far East REIT, which owns hotels and serviced residences in Singapore, started pre-marketing on Friday of an initial public offering of up to $700 million, the biggest in the Southeast Asian country so far this year, a source said.

The real estate investment trust, sponsored by Far East Organization, comprises seven hotels and four serviced residences in Singapore with about 2,500 rooms, said the source, who was not authorized to speak publicly on the matter.

The deal will come on the heels of Ascendas Hospitality Trust’s US$304 million ($382 million) offering, which had to be relaunched this week after the company was forced to remove one of the hotels
from its portfolio.

It will be a welcome development for equity capital markets in Singapore, where issuance plunged 74% to US$4.7 billion in the first half of the year from the same period of 2011. The slump was much steeper than the 30% decline in stock sales in Asia ex-Japan, according to Thomson Reuters data.

Far East REIT and its bankers will start taking orders for the IPO on Aug. 6, with pricing slated for Aug. 15. The REIT is set to debut on the Singapore stock exchange on Aug. 27.

The REIT is being marketed at a yield of 6% to 6.5%, the source said. About half of the orders for the offering are expected to be covered by cornerstone investors, the source added.

DBS Group, Goldman Sachs and HSBC were hired as joint global coordinators and joint bookrunners on the deal.
Source : TheEdge 2012 Jul 20

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