Sunday, July 22, 2012

Far East to launch a hospitality Reit soon

Business Times: Sat, Jul 21

[Singapore]  FAR EAST Reit, which owns hotels and serviced residences in Singapore, has started pre-marketing of an initial public offering of up to $700 million, potentially making it one of the largest deals in the region this year, a banking source said yesterday.

The real estate investment trust, sponsored by Far East Organization, is expected to comprise a portfolio of seven hotels and four serviced residences here. The Reit is being marketed at a yield of around 6 to 6.5 per cent, the source said.

The deal will come on the heels of Ascendas Hospitality Trust's US$304 million offering .

Far East Reit's impending listing is welcome news as equity issuance in Singapore plummeted 74 per cent year-on-year in the first half of the year to US$4.7 billion.

Analysts say the Far East deal is likely to take some shine off Ascendas Hospitality Trust's listing because of the quality of its assets and the location of its entire property portfolio in Singapore.

Far East Reit and its bankers will start taking orders for the IPO on Aug 6, with pricing slated for Aug 15. The Reit is set to debut on the Singapore stock exchange on Aug 27.

Around half of the orders for the Reit's IPO are expected to be taken up by cornerstone investors, some industry watchers say.

DBS Group, Goldman Sachs and HSBC have been appointed as joint global coordinators and joint bookrunners for the deal.

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