Two of the largest initial public offerings (IPOs) that happened in Singapore’s stock market in 2013 was for Mapletree Greater China Commercial Trust’s (SGX: RW0U) and SPH REIT’s (SGX: SK6U). The former got listed on March 2013 while the latter became a publicly-listed entity on July 2013.
At the time of their IPOs, Mapletree Greater China Commercial Trust was valued at S$2.475 billion while SPH REIT obtained a valuation of S$2.25 billion.
Mapletree Greater China Commercial Trust
Mapletree Greater China Commercial Trust is the fourth real estate investment trust IPO that came from the Mapletree Group. Other REITs that are sponsored by the group include Mapletree Logistics Trust (SGX: M44U), Mapletree Industrial Trust (SGX: ME8U), and Mapletree Commercial Trust (SGX: N2IU).
When Mapletree Greater China Commercial Trust floated, it did so at a price of S$0.93 per unit and carried a forecasted yield of 5.6% based on its expected distribution of 5.17 cents for the financial year 2013/2014 (FY 13/14). But with the decrease in share price to its current level of S$0.815, and results that came in better than its forecasts, its annualised distribution yield currently stands at 7.4% based on its annualised distribution of 6.02 cents per unit.
The trust has interest in one property each in mainland China and Hong Kong. One of the property’s Festival Walk, a retail mall with an office block. It is located in Kowloon Tong, Hong Kong and has a gross floor area of 112,297 square metres. In Beijing, China, the trust owns the commercial property, the Gateway Plaza.
SPH REIT is a retail REIT sponsored by newspaper publisher and property developer Singapore Press Holdings (SGX: T39). It currently owns two retail properties in Singapore, namely Paragon and Clementi Mall. The former is one of the most famous shopping destinations along Singapore’s well-known shopping belt, Orchard Road. It has a net leasing retail area of 483,690 square feet and an additional 223,000 sqft of net leasing area for medical and office facilities. Meanwhile, Clementi Mall is a retail mall located in the heartlands of Singapore and is directly connected to the Clementi MRT station.
At its IPO price of S$0.90, it carried a forecasted annualised distribution yield of 5.6% with an annualised distribution of 5.02 cents. Now, with its current price of S$0.99, SPH REIT carries an annualised yield of 5.1%. The REIT will be releasing its second quarter results later today.
The chart above gives us a quick glimpse at the performance of the two entities since their listing. Excluding distributions to its unit-holders, SPH REIT has been roughly flat since closing at S$0.98 in its first day of trading while Mapletree Greater China Commercial Trust is down by more than 20% from its first-day closing price of S$1.05.
With the threat of rising internet rates in the near future, both trusts might need to address the issue of how refinancing their borrowings might ding their profitability.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.