Jul 18, 2014

    China tycoon eyes majority stake in new S'pore Reit

    A CHINESE tycoon plans to buy 60 per cent 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 Reits in Singapore, 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 to raise about S$372 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 per cent stamp duty the Government imposes on foreign buyers of properties also helps push investors to seek alternatives, and Reits have been appealing, Mr Pandey added.

    "For high-net-worth individuals, the current 6-7 per cent 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 Britain.

    DBS Bank is the sole global coordinator for the deal, and is a joint bookrunner with Barclays.

    Mr Tong's holdings in nine Singapore-listed Reits add up to about US$780 million (about S$970 million), Thomson Reuters data showed.

    He owns about 65 per cent of Viva Industrial Trust, about 4.5 per cent of Suntec Real Estate Investment Trust, about 13 per cent of Cambridge Industrial Trust and about 16 per cent of OUE Commercial Real Estate Investment Trust, among others.

    Mr Tong is not alone in buying into Singapore's Reits.

    Gordon Tang, a Chinese national who heads the Singapore-listed property developer Singhaiyi Group, and Mr Tong were cornerstone investors in the initial public offerings of both the OUE Commercial Reit and the Frasers Hospitality Trust.