BHG Retail REIT began with an initial portfolio of five retail properties in China. (Photo: REITsWeek)BHG Retail REIT began with an initial portfolio of five retail properties in China. (Photo: REITsWeek)

Chinese retailer Beijing Hualian Group (BHG) is looking to spin-off its properties in a Singapore-listed retail REIT and raise approximately SGD120 million from an initial public offering (IPO), a preliminary prospectus lodged with the Monetary Authority of Singapore on 23 November has revealed.

The REIT, which will be known as BHG Retail REIT, is being touted as the first pure-play China retail REIT that is sponsored by a China-based retail property operator - Beijing Hualian Department Store Co.

The sponsor is looking to place out a total of 150.1 million units of BHG Retail REIT under the placement tranche and IPO at SGD0.80 a piece. DBS Trustee Limited has been appointed as trustee of the REIT.

BHG Retail REIT will have an initial portfolio of five retail properties with an aggregate gross floor area of approximately 263,688 square metres and and a total appraised value of approximately RMB2.8 billion (SGD605.9 million) as at 30 June 2015.

The properties are namely Beijing Wanliu Mall, Hefei Mengchenglu Mall, Chengdu Konggang Mall, Dalian Jinsanjiao Property and Xining Huayuan Mall. Besides the initial portfolio of five properties, BHG Retail REIT also has a pipeline of 12 properties that the sponsor has granted the right of first refusal (ROFR) to.

“BHG Retail REIT’s policy is to distribute 100.0% of its distributable income for the forecast period 2015 and the projection year 2016 and at least 90.0% of its distributable income thereafter”, said the group in its preliminary prospectus.

At the IPO price of SGD0.80, BHG Retail REIT is projected to pay a distribution per unit (DPU) yield of 5.7% and 6.3% for the forecast period of 2015 and 2016 respectively, representing a DPU growth of 10.5% between the two periods.

Should BHG Retail REIT comes to fruition, the public offer will open on 2 December at 1800 and close on 7 December at 1200. Trading on the mainboard of the Singapore Exchange is scheduled to begin at 1400 on 11 December.

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.