Singapore-based Soilbuild Group Holdings (SGX:S7P) will launch its IPO for the Soilbuild Business Space REIT at a price of S$0.78. The listing will raise some S$457 million for the property builder and will be the first Industrial REIT to launch in 2013, offering up to 586.5 million units in totality.

Soildbuild Business Space REIT will be the first REIT to be affected by recent changes announced by the government with regards to land sales regulations.

The REIT will have an initial portfolio of 7 business and industrial properties in Singapore and will offer investors a yield of 7.6 percent for 2013 and 7.8 percent for 2014 based on the offer price of S$0.78.

Singapore has seen listings of celebrated REITs and Trusts this year with the Mapletree Greater China Commercial Trust listing in March followed by the SPH REIT and the OUE Hospitality Trust last month.

But the Soildbuild Business Space REIT stands out for 2 reasons. Firstly, unlike its predecessors earlier in the year, the Soilbuild REIT has attracted no investors in the cornerstone tranche. This compares starkly with the SPH REIT which saw massive interest from institutional investors during its bookbuilding process.

Secondly, but most importantly, the Soildbuild REIT is the first REIT to launch since the Singapore government changed the rules for related land sales in the earlier part of 2013. Under the new regulations, REITs will have to make upfront cash payments for land rentals when acquiring industrial properties. Previously they only needed to make these payment on monthly basis. This is seen by observers to significantly increase the costs of acquisition for REITs, hurting dstributions in the process.

How the Soildbuild Business Space REIT is received will give a good gauge for other industrial-heavy REITs that are slated to be listed in Singapore this year, including the Viva Industrial Trust that will debut between September and October.

We will be covering the Soildbuild Business Space REIT IPO in greater detail in Issue 6 of REITSWEEK.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.