Champion REIT, which holds Citibank Plaza, will be Hong Kong's fourth listed REIT. Citibank Plaza, with a total office and retail floor space of 1.5 million sf, was valued at HK$22.67 billion ($2.92 billion) on Feb. 28, according to the prospectus. It will be managed by Eagle Asset Management.
As GlobeSt.com reported previously, this is the first REIT offered to the Hong Kong market at a time of soaring office rents, but demand from retail investors was lower than expected. They will now hold only 10% of the REIT and institutions 90%.
By pricing shares near the bottom of a proposed range of HK$5 to HK$5.75, Champion offers a yield of 5.46%--higher than other Hong Kong REITs. But Champion's 50-basis-point spread over Hong Kong's 10-year bonds is still narrow compared to older Asian markets Japan and Singapore, where REITs trade at 160 to 180 basis points above domestic bonds.
One Hong Kong-based analysts suggested the relatively weak demand may be due to competition from forthcoming IPOs such as the Bank of China's $9.8-billion listing, which is expected to be the heaviest subscribed share sale in Hong Kong history. They also suggest that Hong Kong retail investors are also starting to realize that REITs, which pay most of their rent as dividends, are primed to give steady returns rather than heady capital gains.
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