Perennial China Retail Trust plans to raise S$776.2m from IPO

Perennial China Retail Trust plans to raise S$776.2m from IPO - Channel NewsAsia

Key Points

• Perennial China Retail Trust (PCRT) to raise S$776.2m in IPO.
• Units are priced at S$0.70 each.
• The business trust will develop retail space in China.
• Initial S$1.1 billion property portfolio of five properties in Shenyang, Foshan and Chengdu. 
• Acquisition of around S$3.0 billion worth of assets in the pipeline.  
• Projected annualised dividend yield of 5.30% for 2011 and 5.51% for 2012.
• PRCT is expected to commence trading on the SGX on 9 June. 

Author's Note
The business trust was supposed to list in March but has withdrawn the plan due to adverse market conditions. For this IPO, the unit price is set at the lowest end of the indicative price range from S$0.70 to S$0.76 due to "market volatility" in recent weeks. 

PRCT is a property based business trust like Ascendas India Trust. While PRCT is focused on retail properties in China, Ascendas India Trust is focused on industrial properties in India. A business trust has some fundamental differences from a Reit. For more details, you may read an earlier article I have written about the subject matter - All about REIT - REIT, Business Trust, and Shipping Trust.

Some things to consider with regards to this IPO:

• The projected yield of 5.3% for 2011 is not that attractive if we compare it to the most of the S-Reits and other business trust. Capita Retail China Trust, a reit that is also focused in the retail sector of China, currently yields about 6.9%, while Ascendas India Trust, another property business trust, currently yields about 6.7%.
• The recent IPO performances of Hutchison Port Holdings Trust (HPH Trust) and Mapletree Commercial Trust have been disappointing, with the share price falling below IPO price since their listings.
• Mr Market is currently not in a very good mood due to the Greek debt crisis, the end of QE2, etc.
• There has been extensive cooling measures being taken in China to tackle inflation and cool the property market. China related property stocks have generally not performed too well, example being Capitaland, which has recently hit its 52 weeks low in share price.
• In terms of management it should be in very good hands as the CEO of PCRT, Mr Pua Seck Guan, was formerly the chief executive of the CapitaMall Trust and also the Capitaland retail chief.

Related Posts

• All about REIT - REIT, Business Trust, and Shipping Trust 
• Former CapitaMall Trust CEO Plans S$1 Billion Singapore IPO Via REIT