The company will sell two focused properties to REIT, which will then raise about $ 540 million from the sale of 30% of its units to public investors.
Singapore press holdings (SPH) is planning to rise $ 1 billion in a real estate investment trust (REIT) listing, the company said yesterday. The media company that publishes Singapore Straits Times and other newspapers and magazines is pushing ahead with its plan to list two of its properties The Clementi Mall and Paragon both of which will total to about $ 3.07 billion to into SPH REIT. The Clementi Mall is a mid market sub urban mall in the west of Singapore and the Paragon mall is an office complex on the Orchard road. SPH’s shareholders will have to approve the sale of the two properties to the REIT and the special dividend at an extraordinary share holders meeting scheduled to be held on 18th of June. After the approval from its shareholders it can go ahead with the IPO. SPH REIT will then be listed on the Singapore Exchange through an IPO of $ 540 million, the company said. It will hold 70 % of the total REIT after the listing. Some parts of the proceeds that it will receive from the sale of its properties will be distributed to its shareholders in the form of cash dividend to the value of $ 0.18 for every share. Apart from its print business, SPH is also involved in radio broadcasting, exhibits, events and out of home advertising. The company has received eligibility to list (ETL) letter from Singapore Exchange Securities Trading Limited (the ‘SGXST’) in connection with the proposed IPO and listing of SPH REIT on the main board of the SGX-ST.
Shares of SPH went up by 3.9% on the news of the dividend declaration. Mr. Tony Mallek, SPH’s chief financial officer, said that of the $ 1.04 billion raised from REIT, $ 360 million would be paid to clear the loans and $ 290 million to pay dividend to shareholders, $ 500 million will cover fees and expenses and 757 million to fund other growth strategies. The REIT listing is also expected to add more value into SPH’s balance sheet. Alan Chan, the chief executive of SPH said “The special dividend will reward shareholders for their investment in SPH and through SPH’s stake in SPH REIT they will continue to benefit from the establishment of SPH REIT. Mr. Chan also told that the “print business” would be its mainstay as the bulk of revenue comes from newspapers and magazines.
How does REIT make money?
Like any other corporation, REIT’s need capital. A publicly traded real estate investment trust generates capital through IPO. This is just like selling any other stock to the public, who invest in the corporation’s income generating real estate. People who buy IPO’s are investing in real estate which is managed like a stock portfolio. These external funds that raise capital enable the REIT to buy real estate, develop and manage it for the purpose of generating profits. 90% of the taxable income generated through REIT’s should be distributed to the shareholders.
Apart from the two properties to be listed under REIT, SPH also owns a 43 storey up market residential building. It is also developing the Seletar Mall, which is scheduled for completion by the end of 2014.