CapitaLand prices China shopping mall REIT at top end of indicative range

CapitaLand is seeing overwhelming response for the IPO of its CapitaRetail China Trust.The institutional tranche is 196 times subscribed.This is one of the highest subscription rates ever for a Singapore share sale.

The units are being offered at S$1.13 each, at the top end of its indicative range. Some 29 million units have been set aside for retail investors.

The public offer opens on Thursday.

CapitaRetail China Trust is the first China shopping mall trust to be listed in Singapore.

It is also the first REIT to offer investors a pure-play exposure to China’s 13 percent-plus annual growth in retail sales.

The fund has an initial portfolio of seven properties spread across five cities in China, including three in Beijing.

And its portfolio of assets could potentially be tripled, with a secured and proprietary acquisition pipeline.

Lim Beng Chee, Chief Executive Officer of CapitaRetail China Trust Management, says: “Unlike some of the REITs in Singapore, we’re fortunate that our sponsor has created two funds, firstly in the China Development Fund. This fund develops Greenfield projects across China. Currently, it’s developing 19 retail malls across China worth about S$1.4 billion.”

The other fund is the China Incubator Fund, which incubates completed projects to stabilise yield, after which the trust has the first rights of purchase.

“The two funds’ aggregate is about S$1.4 to 1.6 billion. We intend to go out to the market to buy about S$700 to 800 million worth of assets. So we target our asset size to S$3 billion by 2009,” says Mr Lim.

CapitaRetail China Trust is offering 193.3 million units for sale with some 164 million units to be sold to institutional investors.

The IPO will raise some S$218 million.

CapitaLand has forecast a distribution yield of 5.4 percent for 2007, and 5.8 percent for 2008.

The REIT starts trading on the Singapore bourse on 8th December.

If the over-allotment option is fully exercised, the offering will be increased by 28.8 million units to 222.1 million.

JP Morgan is the sole financial adviser for CapitaRetail China Trust, while the underwriters include UBS, China International Capital Corp. and DBS Bank.

Source: Channel NewsAsia, 29 November 2006 

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