OUE to kickoff $800 million IPO for hotel REIT, to hire CEO

By Saeed Azhar and Anshuman Daga

SINGAPORE |
Wed Jun 5, 2013 6:35am EDT

SINGAPORE (Reuters) – Overseas Union Enterprise Ltd (OVES.SI) will begin gauging demand for the listing of a hotel REIT that is expected to raise up to $800 million, sources said, as the Singapore property firm named a chief executive for the unit.

The listing could be the city-state’s third-biggest IPO this year, bolstered by strong demand for REITs and business trusts as investors look for steady income streams and attractive yields.

OUE said it would appoint Chong Kee Hiong, previously the chief executive officer of The Ascott Ltd, CapitaLand’s (CATL.SI) service apartment and hotel arm, to head the REIT, confirming an earlier report in the Business Times newspaper.

The company said in a statement it had received approval from the Singapore stock exchange for the REIT. OUE had put its shares on a trading halt on Wednesday ahead of the announcement.

“We are still in a long period of time where even if interest rates globally increase, they’ll still be low by historic standards, very low,” said Vincent Fernando, analyst at Religare Capital Markets. “So, I think the demand for yield will still be strong.”

OUE, which is led by Indonesian tycoon Stephen Riady, plans to start pre-marketing on Monday for the REIT, which will own hotels such as Mandarin Orchard Singapore, two sources with knowledge of the matter said.

Pricing for the deal is expected in early July and listing around the middle of the same month, one of the sources said.

“The deal is between $700 million to $800 million,” the source said.

OUE, which owns commercial properties and hotels, revived an earlier plan for the REIT after it lost a battle for drinks and real estate group Fraser and Neave Ltd (FRNM.SI) to Thai billionaire Charoen Sirivadhanabhakdi this year.

OUE’s other hotel properties include Marina Mandarin Singapore, Meritus Pelangi Beach Resort Spa Langkawi, Meritus Mandarin Haikou and Meritus Shantou China.

The REIT IPO will rank behind Mapletree Greater China Commercial Trust’s (MAPE.SI) $1.3 billion deal in February and Asian Pay Television Trust (APTT) (ASIA.SI), which owns Taiwan’s third-largest cable TV operator, $1.14 billion IPO in May. Both deals listed in Singapore. ID:L3N0DX0QC

Singapore Press Holdings Ltd (SPRM.SI) said last month it is planning to offer 30 percent of a REIT which could raise S$540 million. The company will also benefit as it shifts debt to the REIT.

Credit Suisse (CSGN.VX), Goldman Sachs (GS.N) and Standard Chartered (STAN.L) are advising OUE on the IPO, sources told Reuters earlier this year.

Singapore’s REIT sector index .FTFSTAS8670 dropped to a four-month low at the end of May, but has edged up nearly 2 percent.

(Additional reporting by Rujun Shen and S. Anuradha of IFR; Editing by Edwina Gibbs and Miral Fahmy)

OUE to kickoff $800 million IPO for hotel REIT, to hire CEO