Prime REIT IPO Balloting Results

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So Prime REIT’s IPO Balloting Results are out (see cover above), and let’s just say they’re not fantastic.

IPO Balloting Results

To break down the results very simply:

Everyone who applied got something – You got it. Everyone who applied for Prime REIT, basically got something. Almost as good as the Singapore Savings Bonds!

Everyone who applied up to 99,900 units got everything they applied for – At S$1.20 per unit, it basically means that anyone who applied for up to S$119,880 worth of units at the IPO got their full allocation. That’s actually really generous by the issuer, depending on how you look at it…

Debrief

As the third US REIT to come in just a few months (following ARA US Hospitality Trust and Eagle Hospitality Trust), I suppose it’s no surprise that the retail crowd is getting sick of US REITs. I know because I’m pretty sick of them myself, having looked at 3 different US REITs in 3 months with not that much to differentiate them.

Throw in all that global macro uncertainty, talk about a 2020 recession, and it probably wasn’t a surprise for the subscription rate to be so low.

Anyway, what’s more interesting is what comes next.

With the poor public reception for Prime REIT, how will the day one IPO trading performance be like?

These units start trading at 2pm on Friday, 19 July 2019, and I would be pretty interesting to see how they perform.

Eagle Hospitality Trust was a bit of a disaster, and I doubt that would happen here again. But if the price does dip post-IPO, it could be quite an interesting buy. I’ll be keeping an eye on this one for sure.

What do you guys think? Share your thoughts in the comments section below! I respond personally to all comments!


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4 COMMENTS

  1. Hi,

    Thank you for your article. Sure, it’s not as hot as some previous IPO, but I do not understand how the reception is considered poor when the public shares have overallocatement option exercise (40m shares instead of 16.7m)?

    • Well it’s not usual to have such high allocation rates in an IPO, so people usually apply for excess thinking they won’t get everything they applied for. To get everything you asked for (through an overallotment) is usually a shock.

  2. I read in another blog that the stabilisation/over-allotment option had been reduced by 50%. But yet public tranche went up 2.4x. The prospectus originally stated stabilisation/over-allotment option is for 46,193,000 units (13.8% of offering), but now it is for 22,727,000 Units (6.8% of offering) – a big difference in number (50% reduction). There is also no mention of demand on the placement tranche, and where the units to increase the public tranche come from (looks like the stabilisation/over-allotment option). I may be wrong, but the numbers don’t square up. So it would be good if they can show the math and explain

    How does this impact investors – lower stabilisation amount but increased retail offer? Can they change it like that after the IPO close? What does this all mean for retail investors. If I am investor, I prefer they don’t increase the public offer because then fewer shares out there, more valuable, so share price go up. I also think they don’t reduce the stabilisation, because then they can use the ammo to buy more shares and price goes up.

    Prospectus info uses 13.8% stabilisation/over-allotment. How does this change affect the info?

  3. I read in another blog that the stabilisation/over-allotment option had been reduced by 50%. But yet public tranche went up 2.4x. The prospectus originally stated stabilisation/over-allotment option is for 46,193,000 units (13.8% of offering), but now it is for 22,727,000 Units (6.8% of offering) – a big difference in number (50% reduction). There is also no mention of demand on the placement tranche, and where the units to increase the public tranche come from (looks like the stabilisation/over-allotment option), but the numbers don’t completely square up.

    How does this impact investors – lower stabilisation amount but increased retail offer? Can they change it like that after the IPO close? What does this all mean for retail investors. If I am investor, I prefer they don’t increase the public offer because then fewer shares out there, more valuable share price go up. I also prefer they don’t reduce the stabilisation, because then they can use the ammo to buy more shares and price goes up.

    Prospectus info uses 13.8% stabilisation/over-allotment. How does this change affect the info??

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