Commercial assets in China to drive Dynasty REIT’s growth

Soon-to-be listed Dynasty REIT says it expects to benefit from the granting this month of Singapore banking licences to two Chinese lenders.

Dynasty is Singapore’s first real estate investment trust to be denominated in the Chinese currency (CNY).

It is set to go public next Tuesday in what may be the country’s biggest IPO this year.

Dynasty REIT aims to raise between S$981.3 million and S$1 billion from the IPO.

It is offering between 893.2 million and 900.8 million units at an issue price of between 85.5 Singapore cents (CNY4.40) to 91.5 cents (CNY4.70) per unit .

Dynasty REIT is sponsored by the Li Ka-shing-backed fund manager ARA Asset Management.

The public offering will close on 24th October.

The group is betting that the 60 billion yuan deposit market in Singapore is set to grow with new banking licenses granted to ICBC and Bank of China.

Mark Chu, CEO of ARA Trust Management (Dynasty) Pte Ltd, said: “In the last two weeks, there are bank licences granted to Bank of China as well as ICBC. I think the government itself is supportive of this growth, and I expect it to continue to grow over the next several years. I hope we offer investors one way to use their deposits in an effective way.”

Mr Chu says the REIT’s greatest growth will come from commercial assets in China.

Its initial portfolio comprises three Chinese commercial properties – Nanjing International Finance Center, Dalian Tianxing Roosevelt Center, and Shanghai International Capital Plaza.

ARA Trust Management says it sees strong organic growth opportunities for the REIT, which has promised investors a 7 percent annualised distribution yield for 2013.

Mr Chu said: “We’re about 20 to 25 percent below market rents right now. So I believe that we are able to mark that to market for the next 2.5 to 4 years, allowing for internal growth. And then lastly, our portfolio is very diversified. No one industry group represents more than 21.5 percent. No one tenant represents more than 7 percent. So again, very diversified thus providing stability.”

Source : Channel NewsAsia – 23 Oct 2012

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