Dynasty REIT: S$1b target for S’pore’s first yuan IPO

Dynasty Real Estate Investment Trust (REIT) opens its yuan-denominated initial public offering today in Singapore’s first flotation to be sold in the Chinese currency, seeking to raise up to 5.4 billion yuan or S$1 billion in what is set to be the largest new share sale here this year.

Units in the trust, backed by Hong Kong billionaire Li Ka-shing and sponsored by ARA Asset Management, will be tradeable in both yuan and Singapore dollars.

It is offering between 893.2 million and 900.8 million units to public and institutional investors at an indicative price range of 4.40 to 4.70 yuan apiece, or S$0.855 to S$0.915, it said in a statement yesterday. At least 53.9 million units will be set aside for retail investors in Singapore, it added.

The trust has also secured two cornerstone investors: Credit Suisse and Amundi, an asset management joint venture between Credit Agricole and Societe Generale. Together they will subscribe to between 246.9 million and 254.6 million units, the final number depending on the IPO price.

Including the sponsor’s investment of between 109.3 million and 117 million units, the total number of issued units is expected to be 1.15 billion units upon completion of the offering.

Dynasty REIT intends to distribute 100 per cent of its distributable income to unit holders from the date of listing to the end of next year. This translates to a yield of between 7 and 7.3 per cent for next year. The Dynasty REIT IPO will be the second denominated in yuan outside mainland China.

Mr Li, Asia’s richest man, and real estate fund manager ARA were also involved in the first – last year’s US$1.6 billion (S$1.9 billion) offering in Hong Kong of Hui Xian REIT, which has stakes in Beijing office properties.

If successful, Dynasty REIT’s IPO will surpass the S$717.6 million flotation by Far East Hospitality Trust in August to become the largest in Singapore in the year to date.

The proceeds will be used for the acquisition of the special purpose vehicle owning the properties including debt repayment, working capital and other transaction costs.

Dynasty REIT’s initial portfolio comprises Nanjing International Finance Center, Dalian Tianxing Roosevelt Center, and Shanghai International Capital Plaza – three commercial properties valued at about 7.7 billion yuan. Dynasty REIT will close its IPO on Oct 24 ahead of an Oct 30 listing on SGX.

Source : Today – 19 Oct 2012

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