Perennial China Retail Trust IPO, Part Deux!

Yes. This is not the first time Perennial China Trust IPO makes it to the news. Some time in Feb, it's reported that it will raise $1.1 billion in IPO.

I still intend to subscribe this IPO. Wish me luck! Heh.

PERENNIAL China Retail Trust (PCRT) revived its stalled initial public offering yesterday, but on a slightly smaller scale - the business trust now aims to raise up to $843 million, down from the $1.1 billion it planned to raise in March.

This means that estimated yields are higher this time round. The trust is now forecasting annualised distribution yields of up to 5.3 per cent for 2011 and up to 5.5 per cent for 2012. Previously, PCRT projected yields of around 3 per cent for both 2011 and 2012.

Sponsor Perennial Real Estate, which is headed by former CapitaLand Retail chief Pua Seck Guan, had initially planned to launch the trust in March.

But the offering was delayed following international roadshows, with the trust citing volatile market conditions. PCRT was to have offered 1.09 billion units priced at $1 per unit. This would have raised about $1.1 billion in gross proceeds to be used mostly for the acquisition of five properties in China.

Mr Pua said then that the PCRT deal will be tweaked to current market conditions and brought to market as soon as possible.

BT understands that the revised offering is expected to be better received by cornerstone and other institutional investors. Among other things, Perennial was able to get discounts of between 3 per cent and 12 per cent off the prices of some properties it will acquire, sources said.

'The new and higher projected annualised distribution yields are closer to that of most Singapore-listed Reits (real estate investment trusts) which will make PCRT more attractive to investors,' said an analyst.

Perennial explained in February that PCRT's estimated yields were lower than comparable Reits' or business trusts' mainly because there will be only one completed and leased-out property at the time of listing.

The rest are in pre-leasing stage or under development. The trust instead offers attractive total returns (yield plus net asset value growth).

'(There is the) potential to quadruple asset base on cost of acquisitions alone,' said a term sheet sent to potential investors, which was seen by BT.

In addition to the initial portfolio of five properties, PCRT has firm options to acquire 50 per cent of at least one million square metres of gross floor area each in high speed rail-linked developments in Chengdu and Xian.

In the revised prospectus submitted to the Monetary Authority of Singapore yesterday, PCRT said that it will now offer up to 1.09 billion units priced at 70-76 cents each.

It will sell up to 577.8 million units to institutional investors and the public, and another up to 516.7 million units to cornerstone investors such as Nan Fung Group, Asdew Acquisitions, AEW, Shanghai Summit, CBRE, Henderson Global Investors and Prudential.

Sources said that roadshows for the IPO started yesterday and will continue until May 25. The trust is expected to be listed on June 8.

From Business Times, "Perennial China revives IPO, seeks $843m".


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