BHG Retail REIT's Beijing Wanliu Mall (Photo: BHG Retail REIT)BHG Retail REIT's Beijing Wanliu Mall (Photo: BHG Retail REIT)

Chinese retailer Beijing Hualian Group (BHG) has launched an initial public offering (IPO) in Singapore for the BHG Retail REIT at an offer price of SGD0.80 per unit.

The retail REIT aims to raise some SGD394.2 million from the issue of 151,169,000 units. Of these 143.1 million units will be issued by way of placement while approximately eight million units will be set aside for retail investors.

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.

“The manager’s key objectives are to provide unitholders with an attractive rate of return on their investment through regular and stable distributions to unitholders and to achieve long-term sustainable growth in DPU and NAV per unit, while maintaining an appropriate capital structure for BHG Retail REIT”, said the REIT in a highlight filed with the Monetary Authority of Singapore (MAS) on 3 November.

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.

The REIT has so far secured SGD135 million from China-based cornerstone investors. DBS Bank Limited has been appointed as bookrunner and underwriter for the IPO.

Applications for the IPO will close on 7 December at 1200 while 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.