Frasers Logistics and Industrial Trust has priced its initial public offer at the top end of the indicative range, given the strong interest from institutional investors.
The $903 million IPO, which is the largest here since 2013, was launched yesterday at 89 cents a unit.
This translates to a distribution yield of 6.8 per cent for the forecast period of four months to Sept 30, and 7.3 per cent for the full year to Sept 30, 2017.
The offering of up to 521.7 million units consists of an international placement tranche of 441.7 million units and a public tranche of 80 million units to the public.
The placement tranche has been more than six times subscribed by institutional investors, primarily long-only funds and real estate specialists, according to the Reit management and bankers for the deal yesterday.
The institutional investors numbered over 100 and were mostly based in Singapore and Hong Kong.
This is the largest IPO here since Asian Pay Television Trust raised about $1.4 billion in May 2013.
"Based on the feedback we got from investors, the pricing was reasonable and fair... We hope to see healthy trading levels post-listing," said Mr Jonathan Siow, vice-president of Asia-Pacific real estate and lodging at Citi Global Investment Banking, which is joint financial adviser together with DBS.
A total of 15 cornerstone investors will also subscribe for about 492.9 million units, or about 48.6 per cent of the total number of units in issue after the listing.
Separately, sponsor Frasers Centrepoint (FCL) will subscribe for about 320.7 million units or a 22.5 per cent stake while TCC Group Investments - a majority shareholder of FCL - will take up about 89.9 million units or a 6.3 per cent stake.
Altogether, Frasers Logistics and Industrial Trust will have a market capitalisation of about $1.27 billion and is set to be the largest Reit listed here with an initially all-Australian industrial portfolio.
Although it has a global mandate to invest in logistics or industrial properties, it will focus on Australia at least in the next three to five years, said Mr Robert Wallace, chief executive of the Reit manager. FCL currently does not have significant industrial assets elsewhere.
He said that FCL chose to list the new trust in Singapore because FCL is a known brand here and the trust will be complementary to its other listed trusts - Frasers Centrepoint Trust, Frasers Commercial Trust and Frasers Hospitality Trust.
"FCL didn't have much of a presence in industrial in the past, so this adds a new string to their bow. From a tax perspective, Singaporean investors are indifferent because of the (tax-efficient) structure we have set up."
The initial portfolio will comprise 51 industrial properties in Australia with an appraised value of about $1.6 billion. These are assets acquired by FCL when it bought Australand in 2014. They are predominantly freehold or with long leasehold land tenures and have a weighted average lease expiry of 6.9 years. Occupancy rate is 98.3 per cent.
Frasers Logistics and Industrial Trust also has call options to acquire up to three more industrial properties in Australia that are under development.
The public offer opened at 9pm yesterday and closes at noon next Thursday. Trading of the units is expected to start at 9am on June 21.