Mapletree Commercial Trust launches $983m IPO

It'll sell up to 1.12b units at 88 cents apiece; trading likely to begin on April27

By UMA SHANKARI

(SINGAPORE) Mapletree Commercial Trust (MCT) will raise up to $983 million from its initial public offering (IPO) in Singapore after pricing the shares at 88 cents each - above the mid-point of the marketed range of 84 cents to 91 cents.

MCT, a unit of Temasek Holdings' property arm Mapletree Investments, also said yesterday that the 548.1 million units set aside for placement to institutional investors were nine times subscribed.

At the offer price, MCT's projected yield for the year ending March 31, 2012 is 5.7 per cent; while that for the year after is 6.2 per cent.

MCT expects to raise total gross proceeds of around $893 million. But the amount will climb to up to $983 million if an over-allotment option is exercised in full.

The trust had planned to lodge its prospectus in March, but had to delay the IPO process due to volatile markets caused by the March 11 earthquake and tsunami in Japan. MCT's IPO is the second biggest in Singapore so far this year.

The trust will sell up to 1.12 billion units (including the over-allotment option) at 88 cents per unit. In addition to the shares that will be placed out to investors, cornerstone investors - including insurance company AIA Group - have committed to take up another 302.2 million units.

Another 164.8 million units will be sold to the public in Singapore. The public offer opens today at 9am and will close on April 25 at 9am. Units are expected to start trading on the Singapore Exchange on April 27.

MCT will initially hold three assets worth $2.8 billion in all - Singapore's largest mall VivoCity, and the Bank of America Merrill Lynch HarbourFront and PSA Building office buildings.

'MCT is the first commercial Singapore Reit to be listed on the Singapore Exchange since 2007,' said Amy Ng, chief executive of the trust's manager. 'Investors now have an opportunity to own a piece of VivoCity, Singapore's largest mall, and other quality Mapletree office buildings.'

JP Morgan analyst Christopher Gee noted that the assets were all 'high profile'. VivoCity, in particular, should be familiar to the public in Singapore, he added.

But in a recent report, Credit Suisse analysts pointed out that while MCT is mainly a retail Reit now, it is likely to become an office Reit in future as the pipeline from sponsor Mapletree Investments comprises mostly office assets.

Mapletree Investments has granted MCT the right of first refusal to acquire 10 properties including HarbourFront Centre and Mapletree Business City.

But the trust, which will have a gearing of 39 per cent after the IPO, is not likely to make any acquisitions in the first 12 months after listing, said Shane Hagan, chief financial officer of MCT's manager.

Sponsor Mapletree Investments will hold a 40 per cent stake in MCT after its listing, assuming the over-allotment option is exercised. Including the sponsor's stake, there will be a total of 1.86 billion units.

The property group's third Reit, Mapletree Industrial Trust, also raised close to $1 billion when it was listed in October 2010.

As at end-December 2010, Mapletree Investments and its subsidiaries own and manage more than $14.4 billion of office, logistics, industrial, residential and retail properties with an extensive network of offices in Singapore, China, Hong Kong, India, Japan, Malaysia, South Korea and Vietnam.