Li Ka-Shing Yuan REIT Said to Fill Orders on First Day as Och-Ziff Buys In
Hutchison Whampoa Ltd. Chairman Li Ka-shing
Dale de la Rey/Bloomberg
Li Ka-shing, chairman of Hutchison Whampoa Ltd. and Cheung Kong (Holdings) Ltd.
Li Ka-shing, chairman of Hutchison Whampoa Ltd. and Cheung Kong (Holdings) Ltd. Photographer: Dale de la Rey/Bloomberg
Billionaire Li Ka-shing’s real estate investment trust, which is seeking as much as 11.2 billion yuan ($1.7 billion) in an initial public offering, received orders for all shares offered yesterday, the day the sale began, people with knowledge of the transaction said.
Investors including New York-based Och-Ziff Capital Management Group LLC (OZM) will buy units in Hui Xian REIT, which will close subscriptions on April 19, said the people, who declined to be identified because the information is private.
Hong Kong’s swelling yuan deposits allowed Hui Xian to offer a yield that’s lower than other publicly traded REITs in the city. Hui Xian investors will get a yield of as much as 4.26 percent, seven times higher than on a one-year deposit of at least HK$500,000 ($64,300) at HSBC Holdings Plc. (HSBA)
“While the pricing appears a bit tight compared to other REITs listed in Hong Kong, retail investors may still be enthusiastic about it, in light of the much lower rates on RMB time deposits in Hong Kong,” said Binay Chandgothia, a portfolio manager at Principal Global Investors, which oversees more than $200 billion of assets globally.
The Chinese currency is also known as renminbi, or RMB.
Hui Xian is offering 2 billion units in a price range of 5.24 yuan to 5.58 yuan in Hong Kong, according to the prospectus for the IPO released on April 10.
Lower Yield
The IPO’s forecast yield to investors is 4 percent to 4.26 percent annualized for the period from April 29 to June 30, the statement said. Most of the real estate investment trusts listed in Hong Kong yield 5 percent to 6 percent, according to Jonas Kan, head of Hong Kong research at Daiwa Securities Capital Markets.
Among Hong Kong-listed REITs, Sunlight Real Estate Investment Trust is estimated to yield 6.8 percent this year, Champion REIT may return 4.6 percent and Link REIT is forecast to yield 4.4 percent, according to Katie Chan, a Hong Kong-based analyst at Haitong International Securities Group Ltd.
Winnie Cheong, a spokeswoman for Cheung Kong in Hong Kong, didn’t immediately respond to phone calls seeking comment. An employee in Och-Ziff’s Hong Kong office, who declined to be identified by name, had no comment.
Hui Xian’s IPO may pave the way for other developers to make similar offerings as Hong Kong Exchanges & Clearing Ltd. seeks to widen its product range to compete in the region. The sale offers investors in Hong Kong a way to bet on appreciation of the Chinese currency while getting higher yields than on the city’s yuan-denominated deposits, which reached a record $52 billion in February.
Premium Towers
BOC International Holdings Ltd., Citic Securities and HSBC Holdings Plc are managing the sale, which began yesterday. The offering is backed by the Oriental Plaza properties which cover 100,000 square meters (1.1 million square feet) along the Changan Avenue in central Beijing.
Oriental Plaza consists of eight premium office towers, a shopping mall, a Grand Hyatt Hotel and serviced apartments, according to its website. Cheung Kong Holdings Ltd. (1), the Hong Kong developer controlled by Li, owns 33.4 percent of Oriental Plaza, while affiliate Hutchison Whampoa Ltd. (13) holds 18 percent, according to the companies’ 2009 annual report.
Companies from Baar, Switzerland-based-based Glencore International AG to Prada SpA of Milan plan share sales in Hong Kong this quarter, providing impetus to the exchange’s push to become a global IPO hub. The sales may push the value of offers to more than $20 billion, which would be a record for a second quarter, data compiled by Bloomberg show.
To contact the reporters on this story: Zijing Wu in London at zwu17@bloomberg.net Fox Hu in Hong Kong at fhu7@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net
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