AirTrunk postpones its $1.5 billion Singapore REIT IPO into next year

Chipmakers are the obvious suspect. Asian equities slid to more than two-month lows on Tuesday, led by a rout in chipmakers ^[13], and ETRealty's report frames the delay as a casualty of that selloff. But the same report closes by listing investors who are reassessing valuations, rising borrowing costs and the durability of AI demand ^[6], and the other account, from people familiar with the plan, puts higher interest rates and market volatility first ^[14].

We think rates explain more of the delay, and the yield shows it. REITs are rate-sensitive and come under pressure when borrowing costs are high ^[16]. AirTrunk had considered offering a yield of roughly 6%, up from the 5.5% it first envisaged ^[9]. For the same cash distribution, that half point means a unit price 8.3% lower ^[11]. Applied to a REIT expected to be valued at about $15 billion ^[18], an 8.3% haircut is roughly $1.25 billion ^[19], on the assumption that the $15 billion was struck at 5.5%, which neither source confirms. Investors stayed cautious even at the higher yield, the people said, because of September's US rate rise and the prospect of more increases ^[15].

The raise itself is small against the valuation: $1.5 billion on $15 billion is a 10% slice ^[12] (or a 10% slice of the equity, if the $15 billion is an equity figure; the sources do not say). The price of that slice will be used to value the remaining 90%. Blackstone and Canada Pension Plan Investment Board paid A$24 billion, or US$16.7 billion, for the company in 2024 ^[17], so $15 billion sits about 10% below that price ^[20]. The two numbers are not necessarily like for like.

Firmus is a different trade. According to the second account, its failure reflected investor caution about AI infrastructure deals that hinge on future earnings ^[8]. We read that as a problem with the valuation multiple, while AirTrunk's is a problem with the yield, so at least two different pricing problems sit behind the three deferrals in about a week.

What would show we have this wrong: the REIT index and US rates steady, and AirTrunk still on the shelf. That would put the weight back on the AI selloff. A launch near the original 5.5% while chip stocks keep falling would say the opposite. AirTrunk did not immediately respond to a request for comment, and Blackstone declined to comment ^[10].