Riding the REIT wave
DBS dominated the Singapore equity capital market in 2019 as falling interest rates sent investors flocking to real estate investment trusts.
It was an unusually busy year in Singapore’s equity capital market with record issuance from the REIT sector, and DBS was responsible for ensuring that there was a steady flow of quality paper.
DBS underwrote more equity offerings in Singapore than anyone else, finishing IFR’s review period with a market share of 30.9%. It managed 24 equity issues, all from REITs and business trusts, totalling US$5.8bn, split between four IPOs, 13 placements, five preferential offerings and two rights issues.
DBS’s unrivalled understanding of the local equity market and its ability to guide foreign issuers through the IPO process made it the go-to bank for new listings. Its hold on the follow-on market was equally strong, as it was able to gauge investors’ preference for certain classes of REITs and help sponsors inject more assets into their listed vehicles and raise money quickly.
DBS managed to price the follow-on offers at a tight average discount of approximately 1.2% to the adjusted volume weighted average price.
Four REIT IPOs launched in Singapore during IFR’s review period, and DBS delivered the bulk of the cornerstone investors for all of them. ARA US Hospitality REIT (US$451m), Eagle Hospitality REIT (US$566m) and Prime US REIT (US$612m) contained hospitality and commercial assets from the US, while Lendlease Global Commercial REIT (US$535m) listed commercial assets in Singapore and Europe. DBS worked with the sponsors of the four REITs for a considerable time to familiarise them with the Singaporean market and the asset mix that would be favoured by local investors. Lendlease REIT, which combined a well-known local shopping mall with a commercial complex in Milan, is a good example of DBS’s ability to pick the right formula for a successful deal.
On the placement front, DBS helped data centre owner Keppel DC REIT raise S$235m (US$171m) through a follow-on offer that was covered within an hour of launch. Sensing that investor interest was strong for data centre REITs, which are seen both as technology and yield plays, the bank also brought Mapletree Industrial Trust to the market with a S$359m follow-on offer and again found eager buyers. Both Keppel DC REIT and MIT traded well and have stayed above their placement prices.
During the review period, DBS also managed the follow-on offerings of Mapletree Logistics Trust, CapitaLand Commercial Trust, CapitaLand Retail
China Trust, and Frasers Logistics and Industrial Trust.