By P.R. VENKAT And CHUN HAN WONG
SINGAPORE—A property developer controlled by Indonesia’s wealthy Riady family is planning to raise up to roughly US$800 million from the listing of its hospitality assets in Singapore this year, a move that would fuel its hunt for assets in the U.S. after a failed acquisition in the city-state.
Overseas Union Enterprise Ltd.,
a Singapore-based developer of mainly hotels and offices, could launch an initial public offering for a hospitality-focused real-estate investment trust in the third quarter, two people with knowledge of the deal said Wednesday.
A spokeswoman for Overseas Union confirmed the company is considering listing at least two of its Singapore assets through a REIT. She declined to elaborate on the potential size of the IPO, but said the deal could be launched in about six months.
The news came a day after a fellow Singapore-based developer set the price for a separate REIT listing, underscoring Singapore’s role as a hub for REIT listings in Asia.
Overseas Union could raise up to one billion Singapore dollars (US$807 million) by listing its first REIT, the people said. The plan comes as Overseas Union, stung by its recent failure to buy out conglomerate Fraser Neave Ltd.,
seeks to diversify its predominantly Singaporean portfolio with acquisitions in U.S. cities such as New York, Los Angeles and San Francisco.
The Riady family controls the Lippo Group, one of Indonesia’s most powerful conglomerates, with interests in real estate, publishing and banking.
The five-star Mandarin Orchard hotel and the adjoining Mandarin Gallery shopping mall are the main candidates for the REIT’s initial portfolio, while the Crowne Plaza Changi Airport hotel could also be added, the spokeswoman for Overseas Union said.
“The REIT option is a good way for us to unlock value in those properties while retaining control over the assets,” she said.
The company has scrapped plans to sell the Mandarin Orchard and Mandarin Gallery to a third party, she said. It had initially hoped to use the sales proceeds to help fund its bid for Fraser Neave.
As of Dec. 31, the 1,051-room Mandarin Orchard, in Singapore’s prime Orchard shopping district, was deemed by independent valuers to be worth S$1.23 billion, while the Mandarin Gallery was valued at S$540 million. The Crowne Plaza Changi Airport was given a S$291 million value.
News of the company’s plan to list a REIT comes as Mapletree Greater China Commercial Trust priced what is set to be the city-state’s largest REIT IPO to date.
The trust, sponsored by Singaporean property developer Mapletree Investments Pte. Ltd., said Wednesday that units in its US$1.3 billion IPO were sold at 93 Singapore cents apiece, the top of the range it had indicated to investors. A listing is planned for early March.
Analysts say the level of the price suggests investors are growing more willing to take on risk and could spur additional IPO activity on the Singapore bourse this year.
Overseas Union, which runs five premium hotels under the Meritus brand, currently has about S$605 million in cash that it could spend on acquiring “well-known assets” in the U.S., the spokeswoman said. She declined to identify specific targets.
The company’s hunt for assets comes after it lost a monthslong battle in January with Thai billionaire Charoen Sirivadhanabhakdi for control of Fraser Neave, which has an extensive real-estate portfolio in addition to assets in publishing and the food-and-beverage sector. Overseas Union offered to pay S$1.4 billion for Fraser Neave’s hospitality assets in October, but Fraser Neave’s board rejected the bid. Overseas Union then found partners to make a joint US$10.6 billion offer for the whole of Fraser Neave in November, but this bid was eventually thwarted by Mr. Charoen.
Write to P.R. Venkat at venkat.pr@dowjones.com and Chun Han Wong at chunhan.wong@dowjones.com
Singapore"s Overseas Union Plans Hotel REIT
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