January 11, 2017 9:51 pm JST

Dasin Retail Trust set to become Singapore's first IPO in 2017

SINGAPORE (NewsRise) -- Dasin Retail Trust is looking to raise around 150 million Singapore dollars ($105 million) from investors in Singapore in what will be the city-state's first initial public offering for 2017.

Dasin, which owns three shopping malls in the southern Chinese city of Zhongshan, has begun the book-building process and hopes to price the units on offer by Thursday, two bankers familiar with the deal said on Wednesday. The units will be offered to investors at 80 Singapore cents each, which works out to a dividend yield of around 8.5%.

Together with units held by the sponsor Zhongshan Dasin Real Estate Co., a developer, and cornerstone investors, the trust is expected to have a market value of around S$440 million when it starts trading, according to a draft prospectus dated Dec. 28 filed on the Monetary Authority of Singapore's Opera website.

Dasin hopes to publish its final prospectus by the end of this week, the sources added.

DBS is the lead manager for the IPO.

Singapore Exchange (SGX) is a popular listing venue for real estate investment trusts (REITs) and other property trust structures that pay regular dividends out of the rents received. Last year, property trusts accounted for three of the four largest new listings on SGX.

However, the bourse has also been hurt by a spate of de-listings, due in part to low valuations in recent years. Departures from the bourse last year included household names like Neptune Orient Lines, subway operator SMRT, Tiger Airways and massage chair and lifestyle products firm OSIM International.

Dasin's planned IPO comes amid a rally in global equities, with Singapore's benchmark Straits Times Index currently trading at 14-month highs.

Despite concerns that rising interest rates would make REITs less attractive by narrowing the yield differential, some analysts say the products remain a good investment for investors in search of steady dividends.

For example, UBS's private banking arm said in a recent report that central banks "are likely to err on the loose side of monetary policy, even if it comes at the cost of higher inflation. "

"REITs provide greater dividend certainty in an uncertain economic climate where earnings uncertainty puts some dividends at risk," the Swiss bank added.

Singapore-listed REITs with China properties offer yields around 7.5% based on current prices.

According to Dasin's draft prospectus, the initial portfolio will comprise the three Zhongshan-based malls that are valued at 4.6 billion yuan ($660 million). The three properties - Xiaolan Metro Mall, Ocean Metro Mall and Dasin E-Colour - have a combined gross floor area around 315,000 square meters.

A fourth property, Shiqi Metro Mall, will be added to the portfolio next year.

Zhongshan, located in China's wealthy Guangdong province, is known for the manufacturing of products such as lights, rosewood furniture, metal fittings and electronic acoustics.

The city is named after Sun Yat-sen, the founding father of modern China, whose name in Mandarin is Sun Zhongshan.

--Kevin Lim

Asia300

Singapore Exchange Ltd.

Singapore

Market(Ticker): SES(S68)
Sector:
Industry:
Finance
Investment Banks/Brokers
Market cap(USD): 5,738.69M
Shares: 1,071.64M

SMRT Holdings Bhd.

Malaysia

Market(Ticker): KLS(0117)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 11.38M
Shares: 297.35M

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