Dynasty / CRCT – Lim and Tan

Dynasty Reit: IPO at S$0.86 – 0.92 / Rmb4.40 – 4.70

• Strictly based on yield alone, it seems clear investors should stick to the well-tested CRCT (part of the CapitaLand Group) than subscribe for Dynasty, the new offering from ARA / Li Ka Shing.
  
• CRCT has declared 2.42 cents for Q3 ended Sept ’12 or 9.63 cents annualized. That’s 5.9% yield, which is in line with Hui Xian‘s, ARA / LKS’ first yuan denominated reit listed in HK, which is still some 20% off its IPO price.
  
• Dynasty is tempting investors with an indicative yield of 6.8-7.1% for 2012 and 7.0-7.3% for 2013.
  
• But that is because of the rental support which will come from the IPO proceeds (ie getting partly paid with your own money)!
  
• Without this, yield would have been 3.2 % and 4.2% respectively.
  
• Indeed, as advised by ARA’s John Lim, and quoted in Edge ‘s latest issue, Dynasty “will do very well in the mid to long term“, ie it is best suited for investors sitting on surplus Rmb deposits.