Hong Kong’s first real estate investment trust, a $HK20 billion-plus offer of units in 180 Housing Authority retail & parking facilities, went to the market and was heavily oversubscribed this week, but still faces a legal hurdle on Monday.
First trading in the Link Reit units is scheduled for Thursday 16 December.
The global offering initially comprised a Hong Kong public offering of 197.22 million units and an international offering of 1.775 billion units (precisely, 1,774,979,000 units) to institutional, professional & other investors. Up to 216,701,000 more units (representing about 11% of the initial offering) could be made available.
The final split was to be determined after pricing, expected to be done on 11 December & announced on 15 December. The price was expected to be between $HK10.51-10.83/unit.
Hong Kong’s Permanent Secretary for Housing, Planning & Lands (Housing), Leung Chin-man, said when The Link Real Estate Investment Trust (Link Reit) was launched on 24 November it was the biggest privatisation of its kind in Hong Kong & the largest single reit initial public offering in the world.
The public offering opened on 6 December, closing heavily oversubscribed on 9 December.
The reit has a strategic partner, CapitaLand Ltd of Singapore, plus 9 cornerstone investors which will take a total 18.8% of the units (assuming over-allotment occurs) for $HK4.446 billion. The cornerstone investors are American International Assurance Company (Bermuda) Ltd, AMP Capital Investors Ltd, Capital Research & Management Co Fidelity Investments Management (Hong Kong) Ltd, First State Investments (Hong Kong) Ltd, Henderson Global Investors Ltd, ING Clarion Real Estate Securities LP, Prudential Asset Management (HK) Ltd & Stichting Pensioenfonds ABP.
CapitaLand has committed to a $US180 million investment, representing 5.9% of total units, also assuming over-allotment.
The Housing Authority got a legal opinion on 7 December that all the steps taken for the divestment of its 180 retail & parking (RC) facilities were in order, paving the way for the public offering.
But on Friday 10 December the authority and the reit manager, The Link Management Ltd, said legal proceedings on this issue had been initiated and a court hearing would be held on Monday 13 December.
However, they said the global offering timetable hadn’t changed from the timetable set out in its offering circular dated 25 November.
149 of the properties are integrated retail & parking facilities, 2 are stand-alone retail facilities and 29 are stand-alone parking facilities.
The portfolio has about 950 000mÂ² of retail space, representing 9.1% of total Hong Kong retail space, and about 79,000 parking spaces, representing 13.7% of total commercial parking spaces.
Management policy is to distribute 100% of income every year. For the March 2006 year it’s indicating a 6.65% yield, based on an indicated HK72.04c/unit divided by the $HK10.83 maximum offer price and excluding transaction costs.
29 October 2004: $HK20 billion Hong Kong reit may be launched before Christmas