Singapore developer CapitaLand Ltd. plans to raise about $200 million by spinning of a real estate investment trust (REIT) of Chinese shopping centres before the end of the year, a banking source said on Thursday.
Southeast Asia's biggest developer has spent a couple of years accumulating shopping malls in China, a much sought-after market among global property investors keen on its climbing rents, capital values and soaring retail sales.
The source told Reuters the listing on the Singapore stock exchange would raise "roughly" S$320 million ($201.5 million), but would give no further details.
CapitaLand said in June that its Chinese retail REIT would have total assets of over S$800 million, suggesting that the trust might be leveraged by debt to a level approaching the limit of 65 percent of assets allowed by Singapore authorities.
CapitaMall Trust , a REIT of Singapore property set up by CapitaLand, will also be offered up to 20 percent of the Chinese REIT in the pre-listing stage.
In early 2005, CapitaLand entered an agreement with China's state-owned Shenzhen International Trust & Investment Co. Ltd. to build 21 shopping centres in China with an option for a further 14, anchored by U.S. retail giant Wal-Mart Stores Inc.
International property investors are eager for exposure to Chinese shopping centres at a time when retail sales are growing at around 14 percent annually.
Last year, a $230 million Hong Kong IPO by GZI REIT of shopping centres in the southern Chinese city of Guangzhou, drew orders of more than $28 billion.
But Chinese REITs are difficult to create because of the high taxes involved in transferring Chinese properties into off-shore companies, which are needed to ensure rental income can be packaged regularly into shareholder dividends.
JPMorgan is underwriting CapitaLand's China mall REIT.
(US$1=HK$7.8=1.588 Singapore Dollar)