SINGAPORE (Feb 5): The manager of Elite Commercial REIT has announced Wednesday that the public tranche of its initial public offering (IPO) was 8.3 times subscribed.
Highly watched as the Singapore Exchange’s first Mainboard listing this year, Elite Commercial REIT had launched its IPO last week, putting up a total of 114.69 million units up for grabs at £0.68 ($1.21) apiece.
As at the close of the offering at noon on Feb 4, Elite Commercial REIT received applications for about 47.85 million units under the public tranche. Some 5.73 million units were offered to the public in Singapore.
In addition, the placement tranche of about 108.95 million units to institutional investors and high net worth individuals was 3.2 times subscribed.
Overall, the £78.0 million offering comprising the placement and public tranches was approximately 3.4 times subscribed, receiving total subscription valued at about £266.8 million.
Separate from the offering, cornerstone investors also agreed to subscribe for an aggregate of 77.83 million units at the offering price.
Gross proceeds of approximately £130.9 million are expected to be raised from the offering and the cornerstone Units.
The first UK-focused Singapore real estate investment trust, Elite Commercial REIT offers a forecast distribution yield of 7.1% for 2020 and 7.2% for 2021.
Distributions will be declared in British pounds, and each unitholder will receive his distribution in Singapore dollars equivalent of the amount declared. Unitholders may elect to receive the entire distribution in pounds.
Elite Commercial REIT’s initial portfolio of 97 quality commercial buildings across the UK has an appraised value of £319.1 million as at Aug 31, 2019.
Over 99.0% of the IPO portfolio is leased to the UK government. As at end August, portfolio occupancy stood at 100%.
With a long weighted average lease expiry of 8.6 years, over 99.0% of gross rental income is derived from triple net leases with inflation-linked uplifts.
“We are delighted with the overwhelming response and support from cornerstone, institutional and retail investors to our offering,” says Shaldine Wang, CEO of the manager. “This is a testament of our strong investment proposition of providing investors with attractive yields and steady cash flow, backed by our stable IPO Portfolio leased to the AA-rated UK government.”
“Going forward, we will focus on harnessing the REIT’s growth potential from acquisition, enhancement and redevelopment opportunities to generate sustainable long-term distribution growth for our unitholders,” she adds.
In particular, Wang points out that Elite Commercial REIT has a right of first refusal granted by Elite UK Commercial Fund II, a private trust managed by sponsor Elite Partners Holdings.
“[This] comprises 62 commercial properties located across the UK, which are primarily long-term leased to the UK Government,” she says.
Trading of Elite Commercial REIT’s units on the Mainboard of the SGX is expected to commence at 2pm on Feb 6.
Oversea-Chinese Banking Corporation (OCBC) and the Singapore branch of UBS are the joint issue managers for the offering.
OCBC and the Singapore units of UBS, CGS-CIMB Securities, and China International Capital Corporation are joint bookrunners and underwriters for the offering.
