Dynasty Reit to raise up to $1.05b in dual-currency listing
IPO will be first in Singapore to be yuan-denominated
By
Joyce Hooi
BT 20121011 JHDYNASTY11E2LR 206387

Mr Li: Dynasty Reit is sponsored by Cheung Kong-linked ARA - PHOTO: REUTERS

DYNASTY Reit, backed by Hong Kong billionaire Li Ka Shing, is set to raise as much as $1.054 billion in a dual-currency listing as Singapore's first yuan-denominated initial public offering (IPO).



The real estate investment trust, which is sponsored by ARA Asset Management Ltd (ARA), filed its preliminary prospectus with the Monetary Authority of Singapore yesterday. ARA is partially owned by Mr Li's Cheung Kong (Holdings) Ltd.



The offering consists of 893,872,000 to 901,292,000 units for a minimum offer price of 4.40 yuan (86 cents) and a maximum of 4.70 yuan (92 cents) per unit. Including sponsor subscription units and units for cornerstone investors, the IPO could raise anything from $987.3 million to $1.054 billion, the bulk of which will go towards acquiring the properties injected into its portfolio. It will trade in both yuan and the Singapore dollar.



Two cornerstone investors - Amundi, the asset management arm of Crédit Agricole and Société Générale, and Credit Suisse - have already conditionally agreed to subscribe to 137,608,000 units at the offering price.



When the Reit is listed, its units will have two trading counters - a primary one in yuan and a secondary one in Singapore dollars. Units traded through both counters will be identical to one another.



"Dynasty Reit ... offers investors unique exposure to the potential appreciation of (the yuan)," ARA Trust Management (Dynasty) Pte Ltd - the Reit's manager - said in the preliminary prospectus. It also noted that the yuan had appreciated about 28 per cent against the US dollar from 2005 to 2011, at a compounded annual growth rate of 4.3 per cent.



Dynasty Reit's portfolio currently consists of three commercial properties in China - Nanjing International Finance Center, Dalian Tianxing Roosevelt Center and Shanghai International Capital Plaza - with a total gross floor area of about 350,476 square metres (sq m). Of the total, about 243,657 sq m is lettable.



The three properties have an average independent valuation of about 7.7 billion yuan.



Depending on the number of units ultimately offered, distribution per unit (DPU) is forecast to range from 0.13 yuan to 0.1335 yuan, using assumptions that were based on last five months of 2012. This translates to a yield of 6.8 to 7.1 per cent, depending on the offering price.



For 2013, DPU is expected to range from 0.3197 yuan to 0.3281 yuan, resulting in a yield of 7 to 7.3 per cent.



Distributions to unitholders - declared in yuan - will be calculated based on 100 per cent of the Reit's annual distributable income from the time it is listed until the end of 2013.



After that, the Reit will distribute at least 90 per cent of its annual distributable income on a semi-annual basis.



The joint financial advisers for the offering are DBS Bank and Standard Chartered Securities (Singapore).