Lacklustre debut by Manulife US Reit

Manulife US Real Estate Investment Trust (Reit) - the year's first mainboard listing - made an uninspiring debut on the Singapore Exchange yesterday.

The Reit opened at 82 US cents (S$1.13), 1.2 per cent below the offering price of 83 US cents, and closed 4.8 per cent down to 79 US cents on a turnover of 42.7 million units.

Analysts told The Straits Times that Manulife US Reit's lacklustre performance was likely due to concerns over the impending United States interest rate hike, which could come into place as early as next month.

"There's still a lot of uncertainty and volatility around the US Fed rate hikes, and that's giving investors the jitters," said RHB Research head Ong Kian Lin.

"If interest rates do go up, that means a stronger US dollar, which will be beneficial for US Reit investors. But they can always buy later instead of going in now."

IG market strategist Bernard Aw said investor appetite here has been weak.

"Singapore investors have not been very interested in the local markets for a while now... We probably need to see a more regular pipeline of IPOs, more Manulife-type listings, before interest really picks up," he added.

Manulife US Reit - known as the first pure-play US office Reit to be listed in Asia - is backed by Canada's biggest life insurer, Manulife Financial Corporation.

Manulife said the initial public offering, the second attempt to list the Reit here, raised US$519.2 million (S$715.8 million).

It had shelved plans for an IPO last July, citing volatile market conditions.

The Reit issued a total of 625.5 million units, including an international placement of 350.8 million units to investors outside the United States and 45.8 million to the Singapore public.

Cornerstone investors subscribed to 169.5 million units, while sponsor Manulife group took up 59.4 million units.

The Reit is expected to offer a dividend yield of up to 6.7 per cent for this year and 7.2 per cent for next year, according to the prospectus.

The Reit's portfolio comprises three US office properties, in Los Angeles and Atlanta, with a total value of US$799 million.

While the Manulife IPO did not set the market on fire yesterday, IG's Mr Aw said it was a step forward: "This is a still good start, especially to counteract the recent wave of privatisation exercises."

Bigger IPOs are being lined up for the year, including Frasers Centrepoint's Australian logistics and industrial assets.

A version of this article appeared in the print edition of The Straits Times on May 21, 2016, with the headline 'Lacklustre debut by Manulife US Reit'. Print Edition | Subscribe