PCRT – BT

Perennial China to raise $776.2m in IPO

Firm confirms that its units will be priced at 70cents each

PERENNIAL China Retail Trust (PCRT) will be raising $776.2 million in gross proceeds from its initial public offering.

It confirmed yesterday that its units will be priced at 70 cents each – at the bottom of the indicative range of 70-76 cents. This is in line with what Reuters reported on Thursday.

‘We had a much stronger book at the lower range,’ said Pua Seck Guan, CEO of PCRT’s trustee-manager. By pricing units at that level, ‘we think we leave (a) few cents on the table . . . hopefully we give investors a better return’.

PCRT has been been on market watchers’ radar for several months. It was due to list earlier at $1 a unit to raise some $1.1 billion but plans were shelved in March, reportedly due to volatile market conditions.

But bad news, ranging from deepening sovereign debt problems in the eurozone and worries of slower growth in China, have continued to hit equity markets this month.

Based on the offer unit price of 70 cents, PCRT is expected to provide an annualised distribution yield of 5.3 per cent for Forecast Year 2011 and 5.51 per cent for Projection Year 2012.

The gross proceeds are expected to come from the offering of 563.6 million units and the issuance of sponsor as well as cornerstone units.

The 563.6 million units include around 52.1 million in a Singapore public offer, which opens today and closes on June 7. Trading is expected to start on June 9. There will also be an international placement of 511.45 million units.

Trust sponsor Perennial Real Estate will subscribe for $20 million worth of units for a 3.7 per cent stake.

PCRT’s IPO has drawn eight cornerstone investors, including CB Richard Ellis Global Real Estate Securities, Henderson Global Investors and Prudential Asset Management (Singapore). The eight will together own 46.1 per cent of PCRT.

PCRT will have an initial property portfolio of around $1.1 billion, comprising five assets in Shenyang, Foshan and Chengdu. These include Shenyang Longemont Shopping Mall and Shenyang Longemont Offices.

With the listing now on track, PCRT will be focusing on growth next. Mr Pua is looking to ‘very quickly activate’ the options to purchase two commercial developments projects which are directly connected to high speed rail stations in Chengdu and Xi’an.