In the first initial public offering (IPO) of a real estate investment trust (Reit) in Singapore this year, Sasseur Reit is offering 266.6 million units at 80 cents each.
This consists of 13.8 million shares for the public, with the rest being 252.8 million placement shares, according to its registered prospectus filed yesterday.
Sasseur Reit, which will begin trading on March 28, offers investors exposure to a new asset class, Chinese outlet malls, and will be the first outlet mall Reit to be listed in Asia. It is forecasting a distribution yield of 7.5 per cent this year, and 7.8 per cent next year.
The Reit launched a $396 million IPO this month - the biggest Singapore equity offering so far this year.
Its portfolio comprises four malls in Chongqing, Bishan, Hefei and Kunming. They have an average occupancy rate of 95.1 per cent and a net lettable area of 304,573 sq m. These will be managed for 10 years by an entrusted manager, Sasseur Shanghai, a unit of sponsor Sasseur Cayman Holdings.
Sasseur Group, the sponsor group, currently manages and operates nine retail outlet malls.
Brick-and-mortar malls tend to look fairly similar in terms of brands, but what we provide is soul.
MR VITO XU RONGCAN, founder of Sasseur Group, and chairman and non-executive director of the Reit manager, on how Sasseur integrates various lifestyle options into the design of its malls.
Given Chinese middle-class consumers' preference for higher-quality branded goods at reasonable prices, this creates a sweet spot for the retail outlet mall industry in China.
MR ANTHONY ANG, chief executive of the Reit manager, on prospects for the retail outlet mall industry in China.
Sasseur Reit will receive a minimum rent of 472.9 million yuan (S$98.5 million) from March to December, and 611.4 million yuan next year under an agreement struck by the Reit, its manager Sasseur Asset Management and sponsor.
Mr Vito Xu Rongcan, founder of Sasseur Group, and chairman and non-executive director of the Reit manager, believes the malls' "super outlet" strategy will pay off in the long term.
Sasseur integrates into the design of its malls various lifestyle options such as cultural activities, sports halls and libraries, amid stores offering international and luxury brands.
"Brick-and-mortar malls tend to look fairly similar in terms of brands, but what we provide is soul," Mr Xu said.
According to China Insights Consultancy, China's outlet mall industry is set to grow at a compound annual growth rate of 24.2 per cent between 2016 and 2021. Sales revenue of the outlet industry in China is projected to surpass that in the United States to become the largest globally by 2030.
Mr Anthony Ang, chief executive of the Reit manager, said: "Given Chinese middle-class consumers' preference for higher-quality branded goods at reasonable prices, this creates a sweet spot for the retail outlet mall industry in China."
Mr Ang, who used to be the chief executive of ARA Asset Management (Fortune) that manages Fortune Reit, noted the strong background of the sponsor, which counts L Catterton Asia Advisors and Pingan Real Estate as strategic shareholders.
Sasseur Reit has also secured $182.8 million from 12 cornerstone investors, including a unit of Chinese e-commerce giant JD.com and CKK Holdings, which owns Charles & Keith. These represent 228.4 million units at the offering price, or 46.1 per cent of the total gross proceeds.
The public offer will close at noon next Monday.
Correction note: An earlier version of this story said cornerstone investors represent 41 per cent of the total gross proceeds. This is incorrect. We are sorry for the error.