Parkway Life – CNA
Parkway Life REIT launches IPO at S$1.28 a unit
SINGAPORE : Singapore’s largest private hospital operator Parkway Holdings has launched the IPO of its healthcare real estate investment trust. It is offering 288.9 million units at S$1.28 each. Parkway is hoping to raise nearly S$370 million for acquisitions in its key markets of Singapore, Malaysia, India and China.
Parkway Life REIT is starting out with a portfolio of three hospitals – Gleneagles, Mount Elizabeth and East Shore. It includes 68 medical offices and 559 parking lots and is worth some S$775 million.
It expects to deliver an annualised distribution yield of 4.74% a unit for 2007. It’s forecasting distribution yields of 4.88% for 2008 and 5% for 2009.
Besides enhancing existing assets to grow, the trust manager says it’s looking to acquire other hospitals and health care-related assets. These include surgery centres, nursing wards, as well as warehouses and logistics facilities. For now, it’s targeting four key Asian markets and a total of 356 medical offices worth over $1 billion in Singapore.
“I’m comfortable to say that over the course of the next two years, we’ll be doubling the size of the asset base of the REIT. Our tier one markets are Singapore, Malaysia, India and China. Our pipeline of acquisitions is heavily weighted towards third-party acquisitions. And we’ve also got immediate opportunities we’re looking at in Singapore,” says Justine Wingrove, CEO of Parkway Trust Management.
The IPO closes on August 13, with trading scheduled to begin on August 23. – CNA /ls
a-iTrust – SGX
Pursuant to Regulation 3(14) of the Securities and Futures (Market Conduct) (Exemptions) Regulations 2006, we, the stabilising manager in respect of the Offering, hereby announce that we have ceased price stabilisation as of 7 August 2007.
In this respect, the over-allotment option granted by Ascendas Property Fund Trustee Pte. Ltd. to J.P. Morgan (S.E.A.) Limited, Citigroup Global Markets Singapore Pte. Ltd. and DBS Bank Ltd, has been exercised in full , in respect of 42,337,725 Units on 7 August 2007, solely for the purposes of covering the 42,337,725 Units which had been over-allotted in connection with the Offering.
Rickmers – BT
Rickmers Maritime posts US$2.8m net profit
RICKMERS Maritime – Singapore’s third shipping trust which was listed in May this year – posted net profit of US$2.8 million for its first financial period from March 30 to June 30.
Rickmers, managed by Rickmers Trust Management, was constituted on March 30 and acquired its initial fleet of five containerships on May 3. Its first operating period is therefore essentially May 4 (when it was listed) to June 30.
The shipping trust reported revenue of US$7.3 million and announced a distribution of 1.364 US cents per unit, in line with projections, for the period.
The aim of the trust is to provide its unit holders with regular quarterly cash distributions through revenue generated by long-term fixed rate time charters of its fleet of container vessels. The current fleet comprised six containerships with four more to be delivered in the coming months.
Rickmers generated US$5.9 million of available cash from operating activities, about 12 per cent higher than the initial public offering forecast.
Rickmers expects to benefit from the continuing strength of the containership market. It pointed to increases being recorded in newbuilding prices as well as second-hand values and charter rates.
The availability of charter free containerships, especially in the sizes exceeding 3,500 TEU, has been significantly reduced with only a limited number of ships coming onto the market over the next 12-18 months, the trust said.
‘The momentum in the market has been fuelled by continuous strong trade growth figures reported in the westbound Far East- Europe trade, which has somewhat compensated for the more moderate growth figures reported on the Transpacific trade,’ it said.
The first shipping trust – Pacific Shipping Trust – made its debut in May last year, followed by First Ship Lease Trust and Rickmers Maritime.
Parkway Life REIT – DJ
Parkway Life REIT IPO Prices At S$1.28/Unit; Raises S$370M
Parkway Life Real Estate Investment Trust has priced units at S$1.28 each in its Singapore initial public offering, according to a prospectus filed with the Monetary Authority of Singapore Tuesday.
The pricing confirms a report by Dow Jones Newswires last week that units would be sold in the upper half of an indicative range of S$1 – S$1.34 each.
The IPO, which will raise S$370 million, includes a public tranche of 5.9 million units and a shareholders’ tranche of 29.4 million units on the basis of one unit for every 20 shares of Parkway Holdings Ltd. (P27.SG).
The public offering opens at 1200 GMT Tuesday and closes at 0400 GMT on Aug. 13, while the offer to Parkway shareholders opens at 2300 GMT Aug. 12 and closes at 0845 GMT on Aug. 17.
Based on projected distributions, the trust will pay an annualized yield of 4.74% in 2007 and 4.88% in 2008.
The units are expected to begin trade on the Singapore exchange at 0600 GMT on Aug 23.
Citigroup Inc. and UBS AG are underwriting the offering.
Source : Dow Jones Newswires
KREIT, SUntec – BT
One Raffles Quay: A good deal for buyers
KEPPEL Land and Cheung Kong (Holdings)’ sales of their respective one-third stake in One Raffles Quay (ORQ) to K-Reit Asia and Suntec Reit have generated much interest in the property market, with many seasoned observers saying the deals are underpriced.
KepLand and Cheung Kong are each selling their one-third stake for a headline figure of $941.5 million. In addition, the vendors are providing ‘income support’ to the respective buyers of up to $103.4 million through 2011 in the case of K-Reit Asia’s purchase, and $103.48 million spread over 54 months for Suntec Reit’s acquisition.
The acquisition price works out to $2,109 per square foot of net lettable area based on the headline price of $941.5 million. Stripping out the $103.4 million income support provided by the vendors reflects a lower net purchase price of $1,877 psf.
Office industry players generally regard this price as low. 1 Finlayson Green was transacted recently at over $2,600 psf. No doubt it is freehold but the 99-year leasehold ORQ, completed last year, is considered a superior property, with bigger floor plates and a top-grade tenant list including UBS, Credit Suisse, ABN Amro and Deutsche Bank.
Talk is rife that a deal is close to being struck for Chevron House (formerly Caltex House), a much older 99-year leasehold property, for $2,700 psf. The buyer is not expected to be a Reit.
Based on this, market watchers say such a non-Reit buyer would have offered at least the same price as Chevron House, if not around 10 per cent higher, or nearly $3,000 psf, for a new Grade A office property like ORQ.
By selling their stakes in ORQ to Singapore Reits (S-Reits), KepLand and Cheung Kong are getting a much lower price.
Reits (real estate investment trusts) need any acquisition to be immediately yield-accretive. Otherwise, there is a risk of the unit price on the stock market falling. This limits the price that a Reit can pay for a property – all other factors being equal.
However, non-Reit buyers, including foreign private equity and unlisted funds, can bid more aggressively. They are prepared to look beyond poor initial yields, on expectation that Singapore office rentals and capital values will continue to increass leases are renewed at higher market rents, and there is also a possibility of selling the asset a few years down the road, to crystallise capital appreciation.
Based on a $2,700 psf price, Keppel Land could have sold its one-third stake in ORQ for $1.2 billion. Assuming a higher $3,000 psf, its divestment could have been for $1.34 billion.
Why did Keppel Land feel compelled to sell its stake for a much lower price to its 40.7 per cent- owned associate K-Reit Asia, which is also listed on the Singapore Exchange?
Of course, there are some merits to the deal from KepLand’s perspective. As UBS Investment Research notes: ‘Selling the asset to K-Reit allows Keppel Land to control the asset in a more tax-efficient structure.’ Reits do not pay corporate tax at the vehicle level if they distribute all their income to unit holders.
But even after factoring the tax saving, KepLand will book a smaller contribution from ORQ following the divestment of its stake to K-Reit.
Of course, many KepLand shareholders may still hold units in K-Reit. The trust was not listed through an initial public offering; instead, KepLand shareholders were given 200 K-Reit units for every 1,000 KepLand shares they held, as at April 18 last year.
At the time that K-Reit was introduced to the Singapore Exchange last year, around 60 per cent of the total number of units went to KepLand shareholders, with KepLand itself holding the remaining 40 per cent stake.
Of course, there may be some KepLand shareholders who do not own any K-Reit units, because they sold them or they bought their KepLand shares after last year’s distribution-in-specie of the K-Reit units.
From their perspective, the argument that KepLand could have fetched a much higher price for its ORQ stake had it sold it to a non-Reit buyer, is even stronger.
The situation is even more complex for Cheung Kong’s sale of its ORQ stake to Suntec Reit. Cheung Kong itself does not hold a stake in Suntec Reit but its ultimate controlling shareholder Li Ka-shing owns some units in Suntec Reit. However, Cheung Kong has a 30 per cent interest in the entity that manages Suntec Reit and, through this, would get a share of the acquisition fee for the deal, usually 1 per cent.
But on a more positive note the deals are attractive to K-Reit and Suntec. They may not have found such attractive acquisitions elsewhere in Singapore.