* Sunway REIT IPO prices at 0.90 ringgit per unit
* IPO is Southeast Asia’s biggest this year
* More Asia REIT IPOs expected this year (Adds details, quotes)
By Julie Goh and Lee Chyen Yee
KUALA LUMPUR/HONG KONG, June 25 (Reuters) - The initial public offering of Malaysia’s largest real estate investment trust (REIT) has been priced at 0.90 ringgit per unit, the lower end of the indicative range, according to a bookbuilding source.
The IPO of Sunway REIT will raise about 1.47 billion ringgit ($455 million) in Southeast Asia’s biggest initial public offering so far this year.
It could also be the largest REIT IPO in Asia, excluding Japan, since Champion REIT’s (2778.HK) initial public offering in Hong Kong in mid-2006, when it raised around $800 million, sources close to the deal said.
Some industry executives predicted more Asia REIT IPOs in the pipeline later this year, such as shopping mall operator CapitaMalls Asia’s CMAL.SI plans to list its REIT spin-off in Malaysia. [ID:nSGE65A05M]
Sunway REIT’s IPO comes at a time when investors are wary of uncertainties in global markets as a result of debt woes in Europe, although some industry executives said REITs offered stable incomes and hence, were seen as safer investments than property stocks.
REITs invest in mainly commercial property and pay rent collected from their properties to shareholders as a dividend and also usually offer returns that are higher than yields of government bonds.
“In more uncertain markets and more volatility, there is a bit of a flight to safety -- the more defensive end of the spectrum within the property world -- and that’s what REITs represent,” Jason Kern, head of real estate advisory at HSBC Holdings (HSBA.L)(0005.HK), told Reuters.
HSBC, along with CIMB (CIMB.KL), JPMorgan (JPM.N) and the investment banking arm of Malaysia’s largest lender Maybank (MBBM.KL), are joint bookrunners for the deal.
Credit Suisse CSGN.VX and RHB Investment Bank (RHBC.KL) are the joint global coordinators of the deal.
The proceeds will be used to pay Sunway City SWCB.KL for the eight properties injected into the REIT.
The company last week set the indicative price range for the sale of 1.6 billion units of the REIT at between 0.90 and 0.98 ringgit per unit.
The IPO comprised an institutional tranche of 1.5 billion units, more than 90 percent of the total, and a retail portion of 134 million units.
Sunway REIT will have a market capitalisation of 2.4 billion ringgit to 2.6 billion ringgit when it is listed on July 8.
The REIT will house eight properties, comprising shopping malls, office towers, and hotels with a combined market value of about 3.7 billion ringgit.
Sunway REIT was not immediately available for comment. ($1=3.232 Malaysian Ringgit) (Editing by Chris Lewis)