Mapletree Greater China Commercial Trust (MAGIC), Asia’s biggest share sale this year, gained on its first trading day as investors were attracted by returns higher than those of comparable properties.
The shares gained 10 percent to S$1.025 at 2:04 p.m. in Singapore after being offered at 93 Singapore cents apiece. They started trading at 2 p.m. and were 29.5 times subscribed.
The property trust, including assets such as the Festival Walk shopping mall in Hong Kong, raised S$1.6 billion ($1.3 billion). The offer price reflects a 5.6 percent yield for the year ending March 2014, compared with the 4.2 percent return for the Bloomberg Asia REIT Index. (BBAREIT)
“Investors are buying because of the attractive yield,” said Alan Richardson, a Hong Kong-based fund manager who helps oversee about $110 billion for Samsung Asset Management Co. “The REIT’s offered yield is higher than the average yield of Singapore REITs. And we shouldn’t forget that its assets are located in China where average yields are even lower.”
The trust is the fourth by Mapletree Investments Pte, a property unit of Temasek Holdings Pte, Singapore’s state-owned investment company. Mapletree Industrial Trust and Mapletree Commercial Trust have advanced about 50 percent from their offer prices, while Mapletree Logistics Trust is up more than 70 percent, according to data compiled by Bloomberg.
Trusts have dominated Singapore’s IPO market in recent years as high-yielding assets gained popularity amid low interest rates.
A total of 30 REITs and property trusts were listed in the city-state with a combined value of S$56 billion, making up 6 percent of the total market capitalization of stocks traded, Lawrence Wong, head of listings at the Singapore Exchange Ltd. (SGX), said in a statement on Feb. 27. “SGX also has the largest number of cross-border asset REITs in Asia,” he said.
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