APL Reit puts back IPO, cites market jitters

It says it will list next year as weak price would hike costs, hurt growth

POOR market sentiment has claimed a casualty in APL Japan Trust. The Singapore Exchange aspirant has postponed its planned initial public offering (IPO) here, at a time of volatility in the stock market.

In a statement released yesterday, the real-estate investment trust (Reit) said that it has decided to postpone its IPO to next year, despite a successful book-building exercise which saw sufficient investor-take up. APL said that it plans to go to the markets next year, when the wider financial environment improves.

‘Following a successful road-show where it was evident that investors endorsed the management and strategy, we were confident of being able to list APL Japan Trust,’ said David Tan, CEO of APL Japan Trust Management, in a statement. ‘However the markets are currently unfavourable and even though the fundamentals of our transaction are sound, there is a risk of post-listing price weakness as a result of negative market sentiment.’

He said that weakness in the trust’s unit price after listing would raise its cost of capital and make growth by acquisition more challenging.

William Schoenfeld, president of APL Group, said: ‘Given the possible unit price weakness post-listing as a result of current macro issues, APL Group could not be fully confident of achieving our projections for growth through acquisitions, therefore it is possible that total returns would not commensurate with APL’s past performance.’

The unfavourable outlook in Japan caused by negative consumer sentiment has caused the Tokyo Stock Exchange Reit Index to plunge sharply. Because of this, APL Japan Trust’s prospects were uncertain.

BT understands that the decision to pull the plug was taken at midnight on Thursday. APL Japan Trust – the second Japan-based Reit to seek a listing on the SGX after Saizen Reit – had already received approval from the Monetary Authority of Singapore to list, and its prospectus was scheduled to be registered yesterday.

It had planned to raise between $432.5 million and $514.9 million by offering 411.9 million units, 391.3 million of which would have gone to institutional and other investors in Singapore, and 20.59 million units to the public here priced between $1.05 and $1.25 each.

JPMorgan was the sole financial adviser for the offering, while JPMorgan and Lehman Brothers International were joint global co-ordinators and joint bookrunners.

The initial property portfolio of the Reit comprised nine commercial buildings in Tokyo, Yokohama and Nagasaki. These buildings have an appraised value of $838.8 million and are primarily for retail use.

According to the prospectus, APL Japan Trust forecasted an initial distribution yield of 4.34 to 5.16 per cent per unit and cash distribution growth of about 7 per cent.

Mr Schoenfeld said in a statement: ‘APL Japan Trust was to be APL Group’s first entry into the public markets after building its reputation in Japan for more than 10 years.’

The Reit sponsor, Asia Pacific Land, is a Japanese real estate company managing a real estate portfolio worth over 100 billion yen (S$1.3 billion).

APL’s decision might prove to be prudent. Yesterday, units of Saizen Reit debuted at 94 cents, 6 per cent below their issue price of $1.

The trust, sponsored by Japan Regional Assets Manager, raised $197 million from its IPO, which was about 2.4 times oversubscribed.

The Reit is based on an initial portfolio of 146 residential buildings in 12 Japanese cities, and according to its prospectus would offer a forecast yield of 6.5 per cent in 2008.

Japan’s Asia Pacific Land delays S’pore IPO

SINGAPORE – Tokyo-based Asia Pacific Land, or APL Japan Trust, will postpone a planned US$350 million initial public offering in Singapore after it grew concerned about the performance of the issue after the listing, the company said on Friday.

Asia Pacific Land’s decision comes after a disastrous Singapore market debut by Saizen Real Estate Investment Trust, which fell 14 per cent on its debut on Friday.

Saizen last traded at 86 Singapore cents against its IPO price of $1.00.

APL, which owns 9 properties in Japan, had planned to raise as much as $515 million (US$358 million) through an offer of 411.9 million units at $1.05 to $1.25 apiece, according to a prospectus posted last month.

‘There is a risk of post-listing price weakness as a result of negative market sentiment,’ said APL chief executive David Tan in a statement. ‘Weakness in APL Japan Trust’s unit price post listing would raise its cost of capital and make growth by acquisition more challenging.’

A source involved in the listing said APL had attracted sufficient demand to sell the units within the original price range, but chose to drop the listing so as not to upset investors.

Since APL started marketing its units last month, the price of Japanese-listed Reits had fallen about 12 per cent, he added. JPMorgan and Lehman Brothers were the bookrunners for theAPL listing. — REUTERS

Another Japan Reit seeks listing on SGX

APL Japan Trust hopes to raise up to $514.9m as it submits prospectus

APL Japan Trust lodged a prospectus with the Monetary Authority of Singapore yesterday, making it the second Japan-based real estate investment trust (Reit) to seek a listing on the Singapore Exchange (SGX) this month.

APL Japan Trust will offer 391.32 million units to institutional and other investors in Singapore and 20.59 million units to the public here at between $1.05 and $1.25 per unit.

Based on the target price, it hopes to raise between $432.5 million and $514.9 million.

JPMorgan is the sole financial adviser for the offering, while JPMorgan and Lehman Brothers International are joint global coordinators and joint bookrunners. UOB Asia is international co-lead manager and coordinator of the public offer.

The Reit sponsor, Asia Pacific Land, is a Japanese real estate company.

It has assets of more than 100 billion yen (S$1.26 billion) under management, as well as development projects totalling 159,000 square metres across Japan.

APL Japan Trust will comprise nine commercial buildings in Tokyo, Yokohama and Nagasaki initially. These buildings have an appraised value of $838.8 million and are primarily for retail use plus 4 per cent for office space.

According to the prospectus, APL Japan Trust forecasts an initial distribution yield of 4.34 to 5.16 per cent per unit and cash distribution growth of about 7 per cent.

The Reit has right of first refusal to five acquisition and development pipeline platforms, including four existing pre-stabilised assets in APL Group totalling about 95,000 sq m and and projects under development of about 61,000 sq m in total.

Earlier this month, Saizen Reit lodged its prospectus. It hopes to raise $244.4 million in an initial public offering at between $1 and $1.08 per unit.

Saizen Reit’s initial portfolio will comprise 146 residential buildings in 12 cities across Japan and is forecast to pay dividend yields of between 6.09 and 6.51 per cent per unit this year and 5.29 to 5.65 per cent next year.

Reference : Prelim Prospectus