Manulife delays $629m Reit IPO, citing market volatility

Protesters in Madrid, Spain, showing their support for Greece on Sunday, as the Greeks voted on whether to accept more austerity measures in return for bailout funds.
Protesters in Madrid, Spain, showing their support for Greece on Sunday, as the Greeks voted on whether to accept more austerity measures in return for bailout funds.PHOTO: AGENCE FRANCE-PRESSE

Greek 'no' vote, waning appetite for Reits likely to have led to move, say analysts

The volatile share market has forced Canadian financial services giant Manulife Financial to put its $629.2 million listing of its United States property trust here on hold.

It said in a statement yesterday "depending on market conditions, the initial public offering (IPO) is expected to proceed at a later date".

Manulife lodged its preliminary prospectus with the Monetary Authority of Singapore last month, with trading expected to start on July 15. It planned to sell 694.4 million units, including cornerstone units, at 82 cents each. This would have made it the biggest IPO in in a year and the first real estate investment trust (Reit) to list in six months.

Cornerstone investors included Oman Investment Fund, Fortress Capital Asset Management and Nikko Asset Management Asia, according to the prospectus.

The Reit is backed by three office properties - in Washington DC, Los Angeles and Orange County, California - with an aggregate net lettable area of about 1.46 million sq ft.

ADDED UNCERTAINTY

"The weekend Greece result could have added to the reason for Manulife to pull out their IPO... The vote hasn't solved any problems; it's just added to the uncertainty.''

MR NICHOLAS TEO, market strategist at CMC Markets

An earlier Thomson Reuters IFR report said demand for the IPO did not materialise amid the debt crisis in Greece. "The weekend Greece result could have added to the reason for Manulife to pull out their IPO," noted Mr Nicholas Teo, a market strategist at CMC Markets. "The vote hasn't solved any problems; it's just added to the uncertainty."

Maybank Kim Eng Research senior analyst Joshua Tan said the Greek crisis likely "pushed over the edge what has been waning appetite for Reits". He told The Straits Times: "Fundamental conditions for occupancy and positive rent reversions are not great with general oversupply conditions for office, industrial and retail (developments), compounded by low demand for space due to a weak economy."

"Investors are also worried that rising bond yields may induce a sector de-rate," he added.

A version of this article appeared in the print edition of The Straits Times on July 07, 2015, with the headline 'Manulife delays $629m Reit IPO, citing market volatility'. Print Edition | Subscribe