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Singapore’s 2017 IPO market dominated by Trusts’ strong performance
Singapore, 30 November 2017 — The Singapore initial public offering (IPO) market today welcomes the highly anticipated listing of Cromwell European Real Estate Investment Trust (CEREIT). As the fourth Trust (comprising REITs and Business Trusts) listing for Singapore this year, CEREIT is expected to raise €556 million (S$889 million), one of the largest public fund raising executed by a REIT on the Singapore Exchange (SGX) Mainboard, at an offer price of €0.55 with a forecasted yield of 7.8%.
With the addition of CEREIT, proceeds raised by Trusts for the first 11 months of 2017 has increased more than two-fold year-on-year to hit a high of S$4.1 billion. Proceeds from the overall Trusts market has improved from S$0.3 billion raised in 2015 to S$1.9 billion raised in 2016. To date, 20 Trusts have listed since the beginning of 2013, creating market vibrancy and raising a total of S$13.9 billion.
Responding to the performance of the Singapore Trusts market, Dr Ernest Kan, Deputy Managing Partner (Markets), Deloitte Singapore said 2017 has been an outstanding year for Singapore’s Trusts market. “The Trusts market has delivered a strong average yield of 6.4%, outperforming the benchmark Straits Times Index’s 3.7%. We have also seen an increase in capital flowing into the REITs and Trusts market in Singapore, evidenced by the oversubscription rate on the Trusts IPOs – NetLink NBN Trust was oversubscribed twice and Dasin Retail Trust seven times. We believe these factors have contributed positively to increases in both the number and size of Trusts listings on the SGX,” said Dr Kan.
The strength and vitality of Singapore’s Trusts market has attracted a rush of foreign assets to list on the local bourse. Over the past five years, there have been a total of 19 Trusts listings. 13 of these Trusts including CEREIT have foreign-based assets, while the other six hold assets wholly or are primarily based in Singapore. With an increased diversity of asset classes on SGX, investors have a larger selection of counters to choose from across geographies and industries. For example, CEREIT with Pan-European assets comprises 74 properties from Denmark, France, Germany, Italy and the Netherlands, and the IPO proceeds will be used to acquire 60 more properties in these countries. Few other Trusts have assets in various geographies such as Australia, China, Japan, Taiwan, USA and UK.
Dr Kan expressed his optimism on the outlook of the Trusts market: “Trusts have generally appealed to investors on the SGX who are looking to hold their investments in the longer term and receive passive income from their investments. Having acted as the reporting accountant for all three out of the four Trusts listings on the SGX in 2017 to date, we continue to see a steady pipeline and sustained interest in the market. With an average yield of 6.4% for all Trusts listed on the SGX, and a stellar performance in Singapore GDP at 5.3% in Q3 2017, 2018 will likely see greater performance in the Trusts market.”
To view the five year data of Trusts IPOs in Singapore, click here.
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