Cheung Kong Holdings Ltd. (1) plans to seek a separate listing in Hong Kong of its extended-stay hotels unit, the second initial public offering this month by companies controlled by billionaire Li Ka-shing.
Horizon Hospitality Investments and Horizon Hospitality Holdings have submitted an application to list share-stapled units on the main board of the city’s stock exchange, Cheung Kong, Hong Kong’s second-biggest builder by value, said in filing to the bourse yesterday. Dynasty Real Estate Investment Trust, an investor in Chinese real estate backed by Li, on Oct. 10 said it is seeking a spinoff in Singapore.
Nicknamed “Superman” by the media for his investing prowess, Li is tapping investor demand for property companies which pay regular dividends. The Hang Seng Property Index has surged 26 percent this year, while Cheung Kong is up 23 percent.
“Right now many investors are seeking something with steady yields,” said Adrian Ngan, a Hong Kong-based analyst at Citic Securities International Co. “This is also not a bad timing for an IPO as sentiment has improved following the U.S. quantitative easing. There’s also speculation that the Chinese government may announce measures to boost the economy.”
Cheung Kong shares fell 0.4 percent to HK$113.20 at the close in Hong Kong trading.
The Horizon group plans to use proceeds from the listing to buy extended-stay hotels from Cheung Kong and publicly traded unit Hutchison Whampoa Ltd. (13), including 4,833 suites and 3.32 million square feet (308,438 square meters) of rental space, Cheung Kong said. The four properties are located in Hong Kong.
The number of tourists to Hong Kong has been rising since China’s government in 2003 began relaxing visa restriction for its citizens traveling to the city, boosting demand for rooms. Hotel room rates per night rose 16.4 percent from a year earlier to HK$1,356 in 2011, while the average occupancy rate gained 2 percentage points to 89 percent, according to statistics on the Tourism Commission website.
A total of 41.9 million tourists visited Hong Kong in 2011, up 16.4 percent from a year earlier, according to the Tourism Commission. More than half of those visitors stayed overnight, the government body said. Visitors to the city rose 16 percent in the first eight months of this year to 31.6 million, according to the Hong Kong Tourism Board.
Cheung Kong will give current shareholders a preferential application for the units, according to the statement. Cheung Kong and Hutchison will retain less than a 30 percent aggregate stake in Horizon, the company said.
Cheung Kong didn’t provide financial details of the proposed transaction. The company and Hutchison will provide five-year term-loan facilities to Horizon after the listing, according to the filing.
Dynasty REIT is seeking as much as 5.4 billion yuan ($860 million) in Singapore’s first dual-currency IPO.
Li, 84, is 13th on the Bloomberg Billionaire Index with a net worth of $26.8 billion. He forecast in 2007 that China’s stock-market bubble would burst and in 2009 predicted the rally in Hong Kong home prices.
Li, who opened a plastic flower factory after World War II, began investing in Hong Kong real estate in 1967 after riots from China’s Cultural Revolution depressed prices to build Cheung Kong into a company with a market value of $34 billion.
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