20-05-2011, 07:49 AM
May 20, 2011
Perennial lowers target in 2nd IPO bid
Business trust eyes less than the $1.1b it aimed for in its first attempt
By Jonathan Kwok
PERENNIAL China Retail Trust is having another go at an initial public offering (IPO) after it surprised the market by postponing its first attempt in March.
The business trust led by ex-CapitaLand retail chief Pua Seck Guan has a less ambitious fund-raising target this time.
The IPO aims to raise gross proceeds of between $776.2 million and $842.7 million, less than the $1.1 billion Perennial had hoped for during the earlier attempt.
It is now offering units at between 70 cents and 76 cents each, giving an annualised yield of between 4.88 per cent and 5.3 per cent for this year. The projected yield for next year will be between 5.07 per cent and 5.51 per cent.
The trust had priced its units at $1 apiece during the initial exercise in February and March that was eventually deferred due to volatile global markets.
Then, it was offering distribution yields of just over 3 per cent. It is offering between 563.6 million and 577.8 million units to retail and institutional investors.
Separately, eight cornerstone investors, including Prudential Asset Management Singapore and a unit of Hong Kong's Nan Fung Group, will invest between $361.7 million and $383.6 million. Mr Pua will put $20 million into the IPO.
The firm is raising less cash this time after being granted a $325 million loan facility by DBS Bank and Standard Chartered Bank. It says it gives exposure to China's growing retail sector. It offers long-term capital growth by buying and developing malls and other assets as well as regular distributions from income generated by the assets, said the prospectus.
There are five assets in the initial portfolio - four malls and one office development in Shenyang, Foshan and Chengdu.
One mall is open and another will open by the third quarter. Both will make up about 63 per cent of the entire trust, based on gross floor area. The other properties will open progressively until 2014.
The firm has three options for commercial projects near high-speed railway stations in Chengdu, Xi'an and Changsha.
The prospectus did not say when the public offer will open but said the counter will start trading at 2pm on June 8.
The trust's sponsor is Perennial Real Estate, wholly owned by Mr Pua, former head of CapitaLand Retail and CapitaMall Trust Management. He led the creation of CapitaMall Trust, the first and largest real estate investment trust (Reit) here.
Observers said Perennial's payouts could grow strongly once the assets under development are completed and new malls are injected. 'The potential of Perennial will be when the individual properties come up... when they'll really gain traction in terms of the yield,' said Sias Research vice-president Roger Tan. 'But that's going to be (over) a few years.'
He added that with Perennial being a business trust, investors will have to take more of a risk on the properties under development. In contrast, Reits have strict limits on how much of the portfolios can be under development at any one time.
The recently launched Mapletree Commercial Trust has spent much of its time since listing trading near or slightly below the 88-cent IPO price, at which it offered a projected yield of about 5.7 per cent for the year to March next year.
jonkwok@sph.com.sg
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PERENNIAL CHINA RETAIL TRUST
A business trust with five assets in the initial portfolio - four malls and one office development in Shenyang, Foshan and Chengdu.
THE IPO
- Aims to raise $776.2 million to $842.7 million
- 563.6 million to 577.8 million units being offered to retail and institutional investors
- Units priced at between 70 cents and 76 cents each; annualised yield of between 4.88 per cent and 5.3 per cent for this year
Perennial lowers target in 2nd IPO bid
Business trust eyes less than the $1.1b it aimed for in its first attempt
By Jonathan Kwok
PERENNIAL China Retail Trust is having another go at an initial public offering (IPO) after it surprised the market by postponing its first attempt in March.
The business trust led by ex-CapitaLand retail chief Pua Seck Guan has a less ambitious fund-raising target this time.
The IPO aims to raise gross proceeds of between $776.2 million and $842.7 million, less than the $1.1 billion Perennial had hoped for during the earlier attempt.
It is now offering units at between 70 cents and 76 cents each, giving an annualised yield of between 4.88 per cent and 5.3 per cent for this year. The projected yield for next year will be between 5.07 per cent and 5.51 per cent.
The trust had priced its units at $1 apiece during the initial exercise in February and March that was eventually deferred due to volatile global markets.
Then, it was offering distribution yields of just over 3 per cent. It is offering between 563.6 million and 577.8 million units to retail and institutional investors.
Separately, eight cornerstone investors, including Prudential Asset Management Singapore and a unit of Hong Kong's Nan Fung Group, will invest between $361.7 million and $383.6 million. Mr Pua will put $20 million into the IPO.
The firm is raising less cash this time after being granted a $325 million loan facility by DBS Bank and Standard Chartered Bank. It says it gives exposure to China's growing retail sector. It offers long-term capital growth by buying and developing malls and other assets as well as regular distributions from income generated by the assets, said the prospectus.
There are five assets in the initial portfolio - four malls and one office development in Shenyang, Foshan and Chengdu.
One mall is open and another will open by the third quarter. Both will make up about 63 per cent of the entire trust, based on gross floor area. The other properties will open progressively until 2014.
The firm has three options for commercial projects near high-speed railway stations in Chengdu, Xi'an and Changsha.
The prospectus did not say when the public offer will open but said the counter will start trading at 2pm on June 8.
The trust's sponsor is Perennial Real Estate, wholly owned by Mr Pua, former head of CapitaLand Retail and CapitaMall Trust Management. He led the creation of CapitaMall Trust, the first and largest real estate investment trust (Reit) here.
Observers said Perennial's payouts could grow strongly once the assets under development are completed and new malls are injected. 'The potential of Perennial will be when the individual properties come up... when they'll really gain traction in terms of the yield,' said Sias Research vice-president Roger Tan. 'But that's going to be (over) a few years.'
He added that with Perennial being a business trust, investors will have to take more of a risk on the properties under development. In contrast, Reits have strict limits on how much of the portfolios can be under development at any one time.
The recently launched Mapletree Commercial Trust has spent much of its time since listing trading near or slightly below the 88-cent IPO price, at which it offered a projected yield of about 5.7 per cent for the year to March next year.
jonkwok@sph.com.sg
----------------------------------------------------
PERENNIAL CHINA RETAIL TRUST
A business trust with five assets in the initial portfolio - four malls and one office development in Shenyang, Foshan and Chengdu.
THE IPO
- Aims to raise $776.2 million to $842.7 million
- 563.6 million to 577.8 million units being offered to retail and institutional investors
- Units priced at between 70 cents and 76 cents each; annualised yield of between 4.88 per cent and 5.3 per cent for this year