SPH Reit

SPH Reit: According to a unrated rpt by UOB Kay Hian, SPH Reit offers a forward yield of 5.8% in 2014F. Comparable retail S-REITs, such as CapitaMall Trust and Frasers Centrepoint Trust, are trading at forward yields of 5.4% and 5.5% respectively. At 5.4% and 5.5% forward yields, SPH REIT would be trading at $0.97 and $0.95 respectively. The institutional tranche was 42x subscribed ahead of the listing. Cornerstone investors including Great Eastern Life, Hong Leong Asset Management, Morgan Stanley Investment Management, Newton Investment Management and Norges Bank have committed to 10% of the units in issue. The initial portfolio consists of two high-quality retail assets, Paragon and Clementi Mall. SPH REIT’s mandate is to invest primarily in retail properties in Asia Pacific. Its conservative capital structure has low all-in financing cost of 2.35% for debt and a low initial gearing of 27%. This gives SPH Reit a debt headroom of $370m before reaching a gearing of 35%. SPH Reit's IPO is offered at $0.90 per unit and public offer ends today at 12pm, with a listing debut on 24 Jul, 2pm.