Prime US REIT raises $612m in downsized offering, makes flat listing debut

101 South Henley, Missouri, St. Louis, USA, one of the properties featured in the IPO portfolio (Source: KBS)

Prime US REIT, the third US-focused REIT to be launched on the Singapore Exchange (SGX) Mainboard in 2019, raised $612 million in a downsized total offering size (previously $705 million) comprising 335.20 million units offered to both the public and placement.

The stock made its listing debut on July 19 at $0.870, down marginally from its initial offering price of $0.88 per unit, and closed flat at $0.88.

As part of the offering, there were 360.25 million units offered to cornerstone investors including Keppel Capital, Singapore Press Holdings (SPH) Limited, Hiap Hoe Investments, and AT Investments, which is linked to India-born Singaporean billionaire Arvind Tiku.

KBS US Prime Property Management Pte Ltd, the manager of Prime US REIT, has said, in its latest disclosure notice, the placement tranche was 1.2 times subscribed.

The REIT raised gross proceeds of $813.00 million, of which $452.20 million has been drawn from the existing loan facilities which totaled up to $1.27 billion. The cash proceeds received will be utilised to fund the acquisition of the IPO portfolio, payment of transaction costs, and working capital purposes.

Sumeet Singh, Head of Research, IPOs & Placements, Aequitas Research, and a Smartkarma Insight provider, noted that Prime US REIT appears to be better positioned than another SGX-listed US office property counter, Keppel-KBS US REIT (KORE) in terms of asset quality, occupancy, and weighted average lease expiration (WALE), but it lags Manulife US REIT (MUST), another SGX Mainboard-listed US office property REIT, based on the similar characteristics.

Hence, Singh thinks that Prime US REIT should trade somewhere between the two. KORE units were last priced at around $0.81 while MUST is priced at around $0.88 per unit on July 19.

After taking into account the weak demand for the IPO, Singh thinks that there might be a bit of selling in the first few days, noting the stabilisation tranche was not very huge.