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HONG KONG-Henderson Land Development has shelved plans to launch a HK$3.9-billion ($500-million) real estate investment trust in the next month. In a statement, the developer says the offering and listing of its proposed Sunlight Real Estate Investment Trust "are not expected to take place by July 15" as it had previously announced.
"We are still studying the REIT listing plan and hope to make it," a spokeswoman for the company says. "But the timetable depends very much on market conditions." Company executives explain that they are still waiting on a decision from the board. There is no guarantee that the REIT may fly at all.
Sunlight comprises 20 grade-B office and retail properties in districts such as Mongkok, Sheung Wan, Tseung Kwan O, Wan Chai and Tsim Sha Tsui. It had a portfolio valued at HK$9.2 billion ($1.2 billion), including such assets as the Metro City Phase I shopping center in Tseung Kwan O, the Sheung Shui Center Shopping Arcade, 248 Queen's Road East and Java Road 108 Commercial Centre.
The decision to put the REIT offer on hold follows a dramatic fall in the share price performance of four listed REITs, three of which are trading below their issue prices. Great Eagle Holdings' Champion REIT has fallen the most--24% below its offer price at yesterday's close. Prosperity REIT--controlled by Cheung Kong Holdings--is down 16% from its offer price, while Guangzhou Investment's GZI REIT is down just under 5%. The only REIT to stay ahead is LINK, which is government-owned and was among the largest REITs ever launched in the world. Its stock, which debuted last November, is up 47% on its issue price.
Henderson declined to give a reason for its decision but analysts suggest market volatility makes conditions unsuitable for new IPOs. Doubts now surround plans by Sun Hung Kai Properties to launch its HK3.1-billion ($399-million) Sun Millennium REIT.
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