RHB Investment Bank (RHB IB), which is the stabilising manager for the Sunway Real Estate Investment Trust (SunREIT), has acquired a total of 29 million units over three trading days since the REIT’s listing last Thursday, pursuant to the price stabilisation mechanism.
Filings by SunREIT showed that RHB IB bought 16 million units on July 8 at prices ranging from 87.5 sen to 89 sen. It acquired another 13 million units on July 9 and 12 for between 87.5 sen and 88.5 sen each.
RHB IB was over-allotted 87.1 million SunREIT units and as the stabilising manager, it may buy up to 87.1 million units to undertake the stabilising action.
Under a Securities Commission (SC) regulation that has been in place since January 2008, the stabilising mechanism allows the underwriter to over-allot a certain number of shares in an IPO, with an undertaking by the to-be-listed company to issue new shares towards covering the over-allotment, if need be.
SunREIT closed unchanged at 88 sen yesterday with 5.1 million units done. The IPO was priced at 90 sen for institutions and 88 sen for retail investors.
Meanwhile, SunREIT also said yesterday the chairman of Sunway REIT Management Sdn Bhd, the management company of SunREIT, Tan Sri Dr Jeffrey Cheah Fook Ling had a deemed interest in seven million units representing a 0.26% stake acquired on July 8, 2010. The units were acquired in the open market at 89.5 sen apiece.
In a report dated June 22, OSK Investment Research said with its defensiveness, longer-term growth catalysts and given the strong backing of its sponsor, Sunway City, the REIT may appeal only to certain investors, particularly those sitting on excess cash and who had a long-term horizon and defensive investment strategy.
Such investors include pension and insurance funds. Indeed, the research house said such was the profile of its recent cornerstone investors — Singapore’s sovereign wealth fund, the Employees Provident Fund, Permodalan Nasional Bhd and Great Eastern Life Assurance (M) Bhd — which collectively held about 14% stake in the REIT.
On SunREIT’s IPO institutional price of 90 sen, the research house said this would imply a dividend yield of 7.4%.
“The 7.4% is implying that the market is willing to give a maximum liquidity premium of about 15% to the REIT vis-à-vis the sector which is trading at an average yield of 8.5%,” it said.
Having said that, the REIT’s low yield may be justifiable given that the trust would be the largest in Malaysia and has the biggest free float — of about RM1.6 billion — among Malaysian REITs, OSK had said.
This article appeared in The Edge Financial Daily, July 14, 2010.
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