Singapore REITs Raise Record Capital Via Secondary Share Sales

Singapore real estate investment trusts are back for more cash, pushing secondary share sales to record levels.

Keppel Pacific Oak U.S. REIT launched a private placement of up to $75.6 million on Thursday, a day after Mapletree Commercial Trust raised S$918.5 million ($671.4m) through a private placement and a preferential offering.

REITs are proving popular among yield-hungry investors in Asia as central-bank easing has sent interest rates to rock bottom across the globe. The Bloomberg Asia Real Estate Investment Trust Index has rallied 23% this year, making it an opportune moment for the sector to issue new equity.

Surging investor demand has propelled fund-raising activity by Singapore REITs to levels never seen before. Their additional share sales have fetched $2.3 billion this year, the most since at least 1999, data compiled by Bloomberg show.

Earlier this month, Lendlease Global Commercial REIT staged a successful debut in Singapore, surging 6.3% at the open from its offer price, the biggest jump among the city-state’s REITs in the past six years. Investors piled in, putting in orders for more than 9.8 times the shares on offer. Meanwhile, Mapletree Commercial Trust said its private placement was approximately 7 times covered, highlighting the strong demand.

The REIT sector was the top institutional net buy for the first eight months of the year, drawing inflows of S$211 million, Singapore Exchange Ltd.’s CEO Loh Boon Chye said at a speech during the Lendlease IPO ceremony.

The performance of follow-on offerings by Singapore REITs has been strong too, with just one of this year’s deals — CapitaLand Commercial Trust — trading below its offer price. The deals this year have returned 9.2% on average, with initial public offerings raising $1.59 billion, a six-year high, data compiled by Bloomberg show.

Bloomberg