CDL files for Reit IPO of UK assets; report says it could raise $940m

CDL has two predominantly office properties in London that could be injected into the UK Reit: 125 Old Broad Street and Aldgate House (above). PHOTO: CDL

SINGAPORE (THE BUSINESS TIMES, BLOOMBERG) - City Developments Limited (CDL) on Friday (June 4) morning confirmed that it had applied for an initial public offering (IPO) of a real estate investment trust (Reit) with commercial assets located in Britain to be listed on the Singapore Exchange's mainboard.

While CDL did not provide a deal value, Bloomberg on Thursday reported that the IPO could raise some £500 million (S$940 million).

Citing unnamed sources, it said the Reit aims to list in the third quarter of this year and will have a portfolio size of about £1.8 billion.

In a filing on SGX, the property giant said on Friday that relevant applications have been made to various regulatory authorities, including the exchange and the Monetary Authority of Singapore.

Its proposed IPO and listing of the Reit are subject to market conditions, among others, it added.

"The company wishes to reiterate that no decision has been made as to whether the transaction will take place and there is currently no certainty that the company will proceed with the offering," CDL said.

A successful listing would mark the first Reit IPO on SGX this year.

In a report on Friday, Bloomberg, citing unnamed sources, said that CDL has included the London building housing HSBC Holdings' headquarters in the Reit IPO in partnership with Qatar Investment Authority (QIA) as part of a plan to boost the Reit's portfolio.

QIA manages about US$300 billion (S$398 billion) of assets and ranks as the world's 11th-largest wealth fund, according to the Sovereign Wealth Fund Institute. It bought 8 Canada Square, HSBC's head office in London, in 2014 from South Korea's National Pension Service for an undisclosed amount.

Deliberations are ongoing and there is no certainty that a deal will proceed, said the sources. A representative for CDL declined to comment. A representative for QIA did not immediately respond to a request for comment.

At £500 million, the IPO would surpass the US$224 million raised by Aztech Global, the larger of just two listings in Singapore so far this year, according to data compiled by Bloomberg. It would also be the second sterling-denominated first-time share sale in Singapore, after Elite Commercial Reit's offering raised about £135 million last year.

Other companies that are exploring local IPOs include Pathology Asia Holdings, which is backed by private equity company TPG and whose listing could raise as much as $800 million, and Sunseap Group, a Singapore renewable energy firm, which could seek up to $600 million in an offering.

CDL's massive $1.78 billion impairment on Sincere Property Group, its joint venture in China, contributed to a full-year net loss of $1.92 billion.

While the group saw improvement across its core business segments in the first quarter of this year, the prolonged pandemic remains a concern as it continues to adversely impact operations, CDL said in an update last month.

The group and its joint venture associates sold 319 units with a total sales value of $513.6 million in the first quarter, a 72 per cent increase from a year ago. The sales in the quarter were spread across various property categories.

CDL shares were down 0.5 per cent to $7.79 as at 10.40am on Friday, while the broader market was off 0.08 per cent. The company's shares have fallen about 1.6 per cent to date this year.

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