Chinese tycoon adds Singapore units to stable of REITs (updated)

Suntec Real Estate Investment Trust

17/07/2014 05:34

(Adds details, background, comments) 
    By Rujun Shen and Saeed Azhar 
    SINGAPORE, July 17 (Reuters) - A Chinese tycoon plans to buy 
about 60 percent of the initial public offering of IREIT Global, 
a Singapore real estate investment trust that will invest in 
European properties, in his latest push to ramp up REIT 
investment in Singapore. 
    Rich Chinese investors have become increasingly interested 
in Singapore's REITs, admiring their stable returns and seeking 
alternatives to park their wealth, while the Chinese property 
market, where many of them have made their fortunes, remains 
shaky. 
    Tong Jinquan, a self-made property tycoon ranked by Forbes 
as China's 35th richest man, plans to buy 254 million of the 423 
million units in the IPO, which are being offered at S$0.88 a 
unit, according to the prospectus filed on Wednesday evening. 
    The IPO aims at raise about S$372 million ($299 million). 
    "Chinese investors have been key buyers of properties in 
Singapore in the past. Now the property outlook is softening, 
and they are exploring other asset classes, including REITs," 
said Vikrant Pandey, an analyst at brokerage UOB Kay Hian. 
    The 15 percent stamp duty the Singaporean government imposes 
on foreign buyers of properties also helps push investors to 
seek alternatives and REITs have been appealing, Pandey added. 
    "For the high net-worth individuals, the current 6-7 percent 
REIT yield is pretty attractive," he said. 
    With a portfolio of four properties in Germany, IREIT is 
expected to have an initial focus on Germany and the United 
Kingdom. 
    DBS Bank Ltd  DBSM.SI  is sole global coordinator for the 
deal and is a joint bookrunner with Barclays  BARC.L . 
    Tong's holdings in nine Singapore-listed REITs add up to 
about $780 million, Thomson Reuters data showed. 
    He owns 64.75 percent of Viva Industrial Trust  VIVA.SI , 
4.58 percent of Suntec Real Estate Investment Trust  SUNT.SI , 
12.93 percent of Cambridge Industrial Trust  CMIT.SI  and 16.20 
percent of OUE Commercial Real Estate Investment Trust 
 OUEC.SI , among others. 
    Tong is not alone in buying into Singapore's REITs. Gordon 
Tang, a Chinese national who heads the Singapore-listed property 
developer Singhaiyi Group  SIHL.SI , stood side-by-side with 
Tong as cornerstone investors in the initial public offerings of 
both OUE Commercial REIT and Frasers Hospitality Trust 
 FRHO.SI . 
    The FT ST REIT index  .FTFSTAS8670 , which tracks the 
performance of REITs listed in Singapore, has risen more than 8 
percent so far this year, beating the 4 percent gain in the 
benchmark Straits Times Index  .FTSTI . 
    Tong's Summit Group, which owns some high-end hotels and the 
popular shopping centre Longemont in Shanghai, held total assets 
of 64.9 billion yuan ($10.46 billion) at the end of 2013, 
according to IREIT's prospectus. 
    ($1 = 1.2423 Singapore dollars) 
    ($1 = 6.2034 Chinese yuan) 
 
 (Editing by Matt Driskill) 
 ((Saeed.Azhar@thomsonreuters.com)(+65-64035664)(Reuters 
Messaging: saeed.azhar.reuters.com@reuters.net)) 
 
Keywords: SINGAPORE REIT/