United Hampshire US REIT Plunges On Singapore Debut

A US commercial real estate fund has picked a bad time for its listing on the Singapore Exchange.

Despite relatively strong interest in the offering, units of United Hampshire US REIT plunged almost 24 percent intraday on its market debut on Thursday, to as low as $0.61 from its placement price of $0.80.

Units closed on Thursday at $0.64, and inched down at Friday’s open to $0.635.

The issuance of 493.3 million units raised gross proceeds of $406.5 million, including the over-allotment option; the funds are largely earmarked to acquire the REIT’s portfolio. The public tranche of the offering was 1.4 times subscribed, while the placement tranche was 3.4 times subscribed.

But the listing came amid a broader global market rout, driven in large part by a disorganised U.S. response to the pandemic outbreak of the COVID-19 virus and concerns of a recession. The Straits Times Index dropped around 3.7 per cent Thursday, after tumbling as much as 4.2 percent intraday; the index was down more than 6 percent in early trading Friday.

Investors may be looking at longer-term yields, though. The REIT is billing itself as Asia’s first listing of a US grocery-anchored shopping centrr and self-storage REIT. It has a portfolio of 22 mainly freehold grocery and necessity properties, and self-storage properties located mainly in the US Northeast, with an appraised value of around US$599 million.

“Compared with other major property sectors, grocery and necessity-anchored shopping centers and self-storage have been amongst the most stable sectors in the US with the highest expected total return potential. The REIT has strong earnings visibility,” with much of the portfolio having built-in rental escalations, the REIT said in a statement Wednesday.

The cornerstone investors, which took up 300 million units, included Golden Sun (China); Kuang Ming Investments, an investment holding company privately owned by Philip Ng and family; Kasikorn Asset Management; Phillip Securities; Helen Chow, a director of Wing Tai Property Management; Chiu Hong Keong and Khoo Yok Kee, the founders of Pintaras Jaya Bhd.; Bangkok Life Assurance PCL.

Private banking clients of UOB and of Credit Suisse’s and HSBC’s Singapore and Hong Kong branches were also cornerstone investors, the statement said.

In addition, Davinia Investment and Steamboat Apollo LLC entered a deal to subscribe for a total of 16.7 million units.

Placement investors included sovereign wealth funds, long-only institutional investors, insurance firms, multi-strategy funds and family offices such as the Government Pension Fund of Thailand and Principal Asset Management, the REIT said in a statement Wednesday.

The REIT’s sponsors are UOB Global Capital LLC and The Hampshire Companies LLC. UOB Global Capital, which originates and distributes private equity, hedge funds and fixed income and real estate products, is an asset management subsidiary of Singapore bank UOB with $3.2 billion in assets under management.

Hampshire Companies is a real estate operating company and investment platform including direct investments and private equity funds; it currently has a portfolio of 275 properties in the US with more than $2.1 billion in assets under management.

Affiliates of sponsor Hampshire Companies — HGF Investors Fund I LLC and HGF Investors Fund II LLC — and U.S. RE Fund II Offshore Feeder 1, which is a subsidiary of UOB, also agreed to subscribe for 88.8 million units.

Since 2008, UOB Global Capital and Hampshire have jointly formed three funds to invest in U.S. real estate; the funds have a combined assets under management of US$1.1 billion, the prospectus said.

UBS’ Singapore branch is the stabilization manager for the offering.

At its placement price of $0.80, the REIT estimated its distribution yield at 7.4 per cent for 2020.