REIT investors looking to tap into the lucrative commercial property market in China can now do so through the Mapletree Greater China Commercial Trust (MGCCT). Slated for trading debut on the Singapore Exchange on March 7, MGCCT will make history as the first and only REIT with best-in-class commercial properties in Hong Kong and China. The REIT IPO will be offered at 93 Singapore cents.

Preliminary estimates have indicated that the IPO will be oversubscribed given the attractive projected distribution growth and the fact that the REIT has a Singapore government-backed property giant, Mapletree, as its sponsor. MGCCT projects a Distribution Yield of 5.6 per cent for FY 13/14 and a Distribution Yield of 6.1 per cent for FY 14/15, giving a projected DPU growth of 8.6 per cent. 3 previous REIT offerings from Mapletree have all beaten their initial DPU forecast.

MGCCT will have an initial portfolio of 2 properties namely of Festival Walk in Hong Kong and Gateway Plaza in Beijing giving a total asset size of S$4.3 billion and total Gross Floor Area of 2.4 million square feet.

Festival Walk has maintained 100% occupancy since 2000 and features premiere tenants such as Marks & Spencer, UNIQLO and Kowloon's first and only Apple store. Photo: Mapletree Greater China Commercial Trust.

Festival Walk is one of the largest shopping malls in Kowloon, Hong Kong consisting of a seven-storey retail mall with a four-storey office tower. It is located in the upscale residential neighbourhood of Kowloon Tong and connected directly to Kowloon Tong MTR station with direct access to the East Rail Line leading to Shenzhen, China. The premier property has maintained 100% occupancy since 2000 and has an immediate catchment size of about 1.5 million persons.

Gateway Plaza is located approximately 20km from the Beijing Capital International Airport. Photo: Mapletree Greater China Commercial Trust.

Gateway Plaza is a development of Grade A office buildings with a retail atrium located in the Lufthansa Area in Beijing. It comprises of two 25-storey office towers that houses notable tenants such as BMW Group, John Deere and Cummins. Current occupancy rate for Gateway Plaza is 98.3 per cent and there are plans to further enhance the retail atrium in the near future to include F&B tenants.

MGCCT has indicated that the REIT will be focused on the acquisition of retail and office spaces in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen in future growth plans.

The REIT has secured 11 cornerstone investors including Morgan Stanley, AIA Group, Norges Bank and CBRE Clarion. Cornerstone investors are entities who have agreed to hold the stock for a stipulated period of time in return for guaranteed stakes in the offering. Applications for the IPO will open from Thursday and anyone wishing to acquire units will have to make an application in the manner set out in the prospectus.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.