TCT – BT

TCT’s unit buyback boosts liquidity, valuation

Unit price rises 12% in first month of implementation

TREASURY China Trust (TCT), the first business trust to initiate a unit buyback programme, said this exercise has bolstered its liquidity and valuation.

Over the first month of its implementation to June 3, third-party trading activity accounted for 40 per cent of total trading turnover.

The period also saw its unit price rise by 12 per cent, narrowing the discount between the unit price and net asset value to 43 per cent from 49 per cent over the one-month period.

TCT said this unit buyback programme is part of its strategy to ‘proactively manage its capital structure, provide a strong platform for stable growth and ultimately increase unitholders’ value’.

This programme will continue until June 24, when TCT will enter a ‘close period’ for the release of its mid-year valuation updates and half-yearly trading results during which it is not allowed to deal with the units.

TCT chief executive Richard David said he was pleased that the programme has met its objectives in just the first month in providing liquidity, a consistent trading pattern and closing the valuation gap.

He also assured shareholders that the unit buyback scheme ‘has been implemented under a regime that values integrity above all else’.

The Business Trust Act does not provide for the specific mechanics of a buyback programme.

Under listing rules, TCT has to promptly inform the market of any acquisitions made under the unit buyback programme and units can be purchased at a price no greater than a 5 per cent premium to the average closing price of five prior trading days.

TCT is also limited to buying back no more than 10 per cent of its total issued units over a 12-month period. All units acquired under this programme are cancelled.

Listed since June last year, TCT owns commercial real estate in China comprising completed assets in Shanghai, Beijing, and Qingdao and a development pipeline. Its 800,000 sq m portfolio is valued at more than 12 billion yuan ($2.3 billion).

It reported last month a net property income of $12.45 million for the first quarter ended March 31, exceeding its forecast by 8.6 per cent and marking a 3.5 per cent improvement over the fourth quarter of 2010.