Fu Heng Warehouse, one of six properties in EC World REIT's initial portfolio. (Photo: EC World REIT)Fu Heng Warehouse, one of six properties in EC World REIT's initial portfolio. (Photo: EC World REIT)

EC World REIT announced on 20 July that it has launched a SGD346.6 million initial public offering (IPO) in Singapore.

The REIT lodged its final prospectus with the Monetary Authority of Singapore on the same day and will be the city state's first industrial REIT to focus on Chinese “specialised logistics” and “e-commerce logistics” properties.

The REIT is sponsored by Forchn Group of China.

EC World REIT will have an initial portfolio of six logistics properties in Hangzhou, China.

As at 31 December 2015, the portfolio has an aggregate net lettable area of 698,478 square metres and a total appraised value of approximately RMB6,357 million (SGD1.3 billion).

The properties have a weighted average occupancy rate of 92.3%.

As at 17 June 2016, Forchn Group owns two other logistics properties in Hangzhou, with a total a gross floor area of 316,420 square metres, which may be inducted into EC World REIT under a right-of-first-refusal mechanism.

“EC World REIT is established with the investment strategy of investing principally, directly or indirectly, in a diversified portfolio of income-producing real estate which is used primarily for e-commerce, supply-chain management and logistics purposes, as well as real estate-related assets, with an initial geographical focus on the People’s Republic of China”, said the REIT.

188,125,600 units, which have been priced at SGD0.81 near the top end of a range indicated in its prospectus, will be offered in the IPO.

Of these, 180,625,600 units will be offered to institutional and qualified investors while 7,500,000 units will be offered to the public.

The sponsor will hold approximately 45.0% of the total number of units in issue immediately after completion of the IPO, subject to an over-allotment option.

Cornerstone investors, comprising of BOCOM International Global Investment Limited, Fosun International Holdings Limited and Sunkits Resources Limited, have also committed to take up approximately 30.8% of the total number of units in issue immediately after completion of the IPO.

Based on its offer price, EC World REIT has projected an annualised distribution yield of 7.1% for the forecast period of 2016 and 7.3% in 2017.

IPO for EC World REIT opens at 9.00 am on 21 July 2016 and closes at 12.00 pm on 26 July 2016.

The listing and trading of EC World REIT units is expected to commence on the Singapore Exchange at 2.00 pm on 28 July 2016.

DBS Bank has been appointed as the sole financial adviser, global coordinator and issue manager of the offering.

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.