Perennial, M&L to raise S$1.5b in S'pore property IPOs

SINGAPORE: Former CapitaLand retail chief Pua Seck Guan and Singapore's Kum family are preparing to raise around S$1.5 billion (RM3.57 billion) via two property trusts, sources said on Tueday, Feb 15.

Pua's Perennial Real Estate has begun pre-marketing its Perennial China Retail Trust to raise slightly over S$1 billion, while the Kums plan to list a hospitality real estate investment trust called M&L REIT to raise about S$450 million.

Perennial's assets comprise five properties in China, including the Red Star Furniture Mall in China's northeastern city of Shenyang. The Perennial initial public offering (IPO) is structured as a business trust as only about a quarter of the properties are completed, two sources briefed on the deal told Reuters.

M&L's properties include the Sheraton Four Points hotel in Sydney and the Ibis Singapore hotel, sources told IFR, a Thomson Reuters service.

A source briefed on the Perennial IPO said it could be a tough sell, as the original owners of the China properties have not committed to taking stakes in the trust. Pua's firm, which will manage the trust, will only hold two%.

"It doesn't have a sponsor. It's uncompleted property so there is also development risk," the source added. Pua or his firm were not available for comment.

Pua, who is widely credited with building CapitaLand's malls business, resigned from Southeast Asia's biggest developer in September 2008, sparking a 7% fall in the firm's share price.

Besides the planned China property trust, Pua's Perennial is currently leading the re-development of three commercial properties in Singapore and it has set up unlisted China funds whose backers include the Beijing Hualian Group.

A second source said Perennial China Real Trust will be priced at book value with the formal launch of the IPO planned for the end of February.

Not much is known about the Kum family, except that many of its investments are in Australia. A source said the M&L IPO will take place in the second quarter.

Goldman Sachs, Standard Chartered and DBS are managers of Perennial's IPO, while DBS, JPMorgan and UBS have been hired as lead managers for M&L. The banks either declined to comment or were not available to comment.

Under Singapore law, a REIT faces restrictions on its level of borrowings and is obliged to distribute at least 90% of its income.

By putting its assets in a business trust, Perennial has greater scope to invest in properties under development and retains the flexibility of paying out a smaller portion of rental income to shareholders.

Singapore is the most popular market in Asia for listing REITs and other trust-like investment structures because of favourable laws such as lower taxes on the dividends paid by REITs.

Earlier this year, Hutchison Whampoa , a firm controlled by Hong Kong's richest man Li Ka-Shing, announced plans to spin off part of its port holdings via a Singapore IPO. — Reuters

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