Prime US Reit makes tepid debut to end at IPO price of US$0.88

Singapore

PRIME US Reit made a tepid debut on the Singapore Exchange (SGX) on Friday, closing at its initial public offering (IPO) price of US$0.88.

From the opening gong at 2pm till market close at 5pm, the units traded within a narrow band of US$0.865 to US$0.88, with about 10.7 million units changing hands.

The IPO had received applications for 1.2 times the original offer of 335.2 million units.

Prime US Reit has an initial portfolio of 11 Class A and freehold office properties across nine office markets in the US.

Sumeet Singh, head of IPO and placements for Aequitas Research, which publishes on Asian markets insights platform SmartKarma, said: "Keeping in mind the weak demand for the IPO there might be a bit of selling in the first few days and the stabilisation tranche isn't very big. Were the price to correct, we would be buyers at below US$0.84."

Barbara Cambon, chief executive officer and chief investment officer of KBS US Prime Property Management, the manager of Prime US Reit, said: "The successful IPO of Prime US Reit is a testament to the market's confidence in our stable and resilient IPO portfolio that provides a unique geographically-diversified exposure to the growing US commercial real estate sector, as well as a strong potential for acquisition growth beyond the IPO portfolio through leveraging the established KBS platform."

Mohamed Nasser Ismail, head of equity capital markets, SGX, said the exchange was delighted to welcome Prime US Reit to its growing family of Reits with international assets.

"This is our third pure-play US Reit listing this year, bringing the total number of US-focused Reits to five, which demonstrates rising investor interest in US real estate," he noted.

"The three US Reit IPOs on SGX this year have raised close to US$1.7 billion - making them the top three IPOs in Asean year-to-date by funds raised - with Prime US Reit raising the highest amount at US$612 million."

Prime US Reit is the third US office Reit to list here after Manulife US Reit and Keppel-KBS US Reit.

SGX listings now include five US-focused trusts that have a combined market capitalisation of over S$5 billion.

The existing four US-focused trusts have an average price-to-net asset value ratio of 0.97 time and an average dividend yield of 7.4 per cent.

Prime US Reit's listing brings the total number of SGX-listed

Reits and property trusts to 45, with a combined market capitalisation of about S$110 billion.

Together with real estate companies, the overall SGX real estate cluster has a combined market capitalisation of over S$190 billion, said Mr Nasser.