BHG Retail REIT (S$0.80): China malls on offer at 6.3% FY16 yield
BHG Retail REIT is launching a mainboard listing at an IPO price $0.80/unit, ending the new listing drought on SGX for this year.
The offer of 151.2m units comprise a placement tranche of 143.2m units and public tranche of no less than 8m units. It has managed to secure $134.9m in commitments from cornerstone investors such as China Life Insurance, and China Merchants Bank Asset Management.
The REIT’s sponsor and manager Beijing Hualian Department Store is listed on the Shenzhen stock exchange and will own a 5% stake in the REIT post-IPO.
BHG Retail REIT’s initial portfolio of five retail malls are located in Beijing, Hefei, Chengdu, Dalian, and Xining and has an aggregate floor area of 263,688sqm, valued at ~$605.9m as at end-Jun.
The REIT hinges its performance on the growing economic clout of the Chinese middle class as well as the government's objective to boost domestic consumption for growth.
Gross IPO proceeds of $394.2m has been earmarked for acquisitions with the REIT’s sponsor setting up a list of 12 retail malls in China as future pipeline assets.
Based on its listing price of $0.80, the REIT is forecasting annualised distribution yield of 5.7% and 6.3% in FY15 (last two months) and FY16.
The public offer will close at noon on 7 Dec with trading slated to start at 2pm, 11 Dec.
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