China Merchants breaks Hong Kong’s five-year REIT listing drought

Photo: Reuters

Hong Kong is set to welcome its first listing of a real estate investment trust in five years, with the China Merchants Commercial REIT seeking to raise up to $400 million.

The REIT, which owns five commercial and office properties in Shenzhen, wants to expand in the Greater Bay Area which has a population of about 70 million and includes Hong Kong, Macau and Guangdong province.

It plans to issue 750 million units priced between HK$3.42 and HK$4 each, according to a term sheet seen by Reuters. That would raise $330 million to $380 million.

A greenshoe option of 5% of units outstanding could lift the deal value to $400 million. At the top end of the range and including the greenshoe, the REIT would have a market value of around $575 million.

Singapore has long been seen the Asian hub for REITs, and Hong Kong has just 11 listed. The last Hong Kong REIT listing was December 2014, when Dalian Wanda raised $4 billion which was the largest on record for the city, according to data from Refinitiv.

China Merchants Commercial REIT executives started briefing investors in Hong Kong on Thursday and will shift to Singapore on Friday ahead of the deal progressing next week.

Sumeet Singh, head of research and IPOs at research firm Aequitas, also said Hong Kong investors tended to prefer bigger fry.

“Hong Kong has always been a growth market, with investors looking for the next Tencent, Meituan or now even Alibaba. A REIT is just not as exciting in terms of future prospects,” he said in research published on the Smartkarma platform.

The China Merchants REIT bookbuild started on Thursday and the units are expected to be priced on Tuesday, with trade due to start on Dec. 10. The deal was first proposed in September and put on hold while financial market sentiment improved.

Hong Kong’s IPO market has seen $21.8 billion raised so far this year, on par with the New York Stock Exchange and just behind the Nasdaq’s $23.6 billion.

Citigroup is leading the deal as the sole listing agent and is the joint global co-ordinator alongside China Merchant Securities and DBS.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.