The Singapore Exchange has chalked up its first listing from China this year - a Reit focused on mainland logistics properties.
EC World Reit launched its initial public offering (IPO) on the mainboard yesterday, backed by a portfolio of six properties in Hangzhou which the firm says have a combined valuation of about 6.36 billion yuan (S$1.3 billion).
The real estate investment trust (Reit) is selling 188.1 million units at 81 cents apiece - raising $629.8 million in gross proceeds, including $283.4 from its sponsor and $194 million from cornerstone investors. It is near the top end of the indicative 76 to 82 cent range.
Retail investors will be offered 7.5 million units while the rest will go to institutional investors.
The Reit's Shanghai-based sponsor, Forchn Holdings Group, will retain a 45 per cent stake, while 30.8 per cent will be held collectively by cornerstone investors.
The offer is slated to close at 12pm on July 26, with units to commence trading at 2pm on July 28.
The Reit will distribute all of its distributable income for the period July 28 to Dec 31 and 2017, and at least 90 per cent of its distributable income in subsequent payouts - representing an annualised distribution yield of 7.1 per cent for the 2016 period and 7.3 per cent for 2017.
Mr Peter Lai, chief executive of the Reit's manager, yesterday said it sees strong growth potential in China's logistics and e-commerce infrastructure market, given the booming e-commerce demand and the shortage of quality logistics facilities.
The Reit's diversified tenant base - which includes state-owned enterprises such as China Tobacco Zhejiang Industrial and China Post Express Logistics - will help ensure a stable income stream, said Mr Lai, adding that its properties have a weighted average occupancy rate of 92.3 per cent as at last Dec 31.
One broker has given the Reit the thumbs down: Religare Capital Markets has put out a "do not participate" call on the IPO, warning that "downside risks to owning the Reit are high and the low yield does not compensate for these risks".
But Mr Lai said EC World Reit is "well-positioned" to draw on its sponsor's networks to pursue acquisition opportunities of e-commerce properties that provide attractive cash flows and yields.
He cited two e-commerce and logistics properties in Hangzhou owned by Forchn Holdings which could be injected into the Reit. If acquired, this would lift the Reit's portfolio by 54.8 per cent in terms of gross floor area to 893,492 sq m.
"We have a sponsor (with) strong operational competence and expertise, and they also happen to be a co-founder of the Cainiao Network (Alibaba's logistics arm), which lends us a lot of credibility. The sponsor, to us, is a big advantage," he said.
He added: "It's good that (the broker's report) alerts investors - they must be aware of all the risks before making an investment.
"But a good investor is not only aware of risks, he is also aware of the opportunities."
EC World Reit's portfolio comprises three port facilities (Chongxian Port Investment, Chongxian Port Logistics Warehouse and Fu Zhuo Industrial Port), two e-commerce warehouses (Stage 1 Properties of Bei Gang Logistics and Fu Heng Warehouse) and a specialised logistics property (Hengde Logistics).