The rising interest rate always impacts investors’ yield expectation. Two Singapore REITs; Mapletree and GLP see the current market condition. They are afraid about the rising interest impact, thus they delay IPO. Both Mapletree and GLP are the high-profile sponsors delaying their deals.
Mapletree Investments, the property developer and manager, delayed the REIT IPO around $737m. GLP New Economy REIT also delayed their launch of a S$1.1bn float. This GLP-sponsored waits for a more stable rating. Mapletree’s M Star holds accommodation assets in many countries including the U.S., Canada, and UK. The company is going to be in REIT accommodation on the Singapore Exchange.
Soon after the first half, IFR Asia reported that M Star had started meeting for potential cornerstone investors. Interest rate is spiking worldwide after U.S. central bank raised federal funds by 25bp. It is the first increase since 2018. The Fed has warned that this valuation may rise further during the year. It will surely affect investors’ pricing expectations for yield products such as REITs.
Mapletree has seen the yield range as much as 5%-6%. The company figured out the interest rates could rise faster than ever before. But they are not keen on offering sharper high yields on the REIT. A banker on one of the IPOs argued that both sponsors and assets are first class but investors expect more money on the table.
GLP on the other hand targeted a yield of 5.7% for 2022. They plan for pre-marketing kick off in March in order to win regulatory approval. However, according to the person dealing with it, GLP REIT is a bit late this time, fortunately IPO is still proceeding. This year there would be no mainboard listing because of the delay. Last year on the other hand, Digital Core REIT and Daiwa House Logistics Trust raised $600m and $464m respectively in SGX IPOs.
