Facing each other across Singapore’s Orchard Road shopping belt, the malls owned by Singapore Press Holdings and Overseas Union Enterprise have competed for shoppers. Now, they will compete for investors.
Overseas Union said last week it’s raising as much as $614 million in an initial public offering that will include the Mandarin Gallery mall, one day after newspaper publisher Singapore Press said it’s seeking S$504 million from the IPO of a real estate investment trust with its Paragon mall as the flagship property.
“If they’re going to list about the same time, they will compete for the same pool of investors,” said Ong Kian Lin, an analyst at Maybank Kim Eng Research, who said the trusts may seek investments from private banking clients. “If you leverage on the private wealth side, and if market conditions stay the same right now, it should go through.”
The trusts were offered to investors last week as Federal Reserve Chairman Ben S. Bernanke and the Bank of Japan both signaled they will maintain measures to boost their economies, giving the MSCI Asia Pacific Index and the measure tracking Singapore REITs their best week in more than two months.
“With the way interest rates seem to be stabilizing lately, investing in REITs again could become viable,” said Alan Richardson, a Hong Kong-based money manager at Samsung Asset Management, which oversees more than $100 billion globally. “Paragon is the crown jewel of Singapore’s shopping landscape. Mandarin Gallery is a good asset that’s been trying to improve over the years and reinvent itself.”
IPO PRICING
Both trust offers may price this week, according to people familiar with the matter. Indicative demand for SPH REIT’s stock sale has already exceeded available supply, said the people, who asked not to be named as the information isn’t public.
OUE Hospitality Trust will have an initial asset portfolio that comprises the 1,051-room Mandarin Orchard Singapore hotel and the four-story Mandarin Gallery mall, which houses stores including Emporio Armani and Marc by Marc Jacobs. Overseas Union said in the prospectus it has hotels that could be added to the trust, including the Crowne Plaza Changi Airport.
For Singapore Press, the Paragon counts Prada, Gucci and Jimmy Choo among its tenants. The trust will also hold the Clementi Mall in a western Singapore suburb. The newspaper company mentioned a limited pipeline of properties for the REIT as a risk factor in the preliminary prospectus.
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