Developer shelves $3.9b Sunlight Reit

PUBLISHED : Tuesday, 13 June, 2006, 12:00am
UPDATED : Tuesday, 13 June, 2006, 12:00am

Henderson Land Development has shelved its $3.9 billion real estate investment trust as sentiment towards the property trusts has soured in the face of a more volatile global market, sources said.

The sources said that the developer, which had initially planned to delay the launch for a couple of weeks, might put off the proposed offer until later in the summer or even until the end of the year since the asset spin-off had already been structured.

'It's not like they need the money. You want to do it in good market conditions. You just prepare yourself for when the market comes back,' said a source.

In a statement issued last night, the blue-chip developer said 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. But the timetable depends very much on market conditions,' a spokeswoman for the company said.

Henderson added that 'the board had not made a final decision whether or not to proceed and, if so, when to proceed with the proposed transactions, the offering and listing'.

Henderson's decision to put its reit offer on hold comes on the heels of the tumbling share price performance of four listed reits, three of which were trading below their issue prices.

Among them, Great Eagle Holdings' Champion Reit was the worst, sinking 24.02 per cent below its offer price at yesterday's close. This was followed by Prosperity Reit - controlled by Cheung Kong (Holdings) - which was off 16.2 per cent from its offer price, while Guangzhou Investment's GZI Reit was 4.87 per cent down.

Only the government's Link Reit managed to stay ahead. The stock, which made its debut in November last year, is up 44.66 per cent on its issue price.

Sun Hung Kai Properties was also studying whether to delay its $3.1 billion Sun Millennium Reit listing as it might not be able to secure the pricing it wanted amid poor market sentiment, sources said.

Sunlight, which consists of 20 grade B office and retail properties in districts such as Mongkok, Sheung Wan, Tseung Kwan O, Wan Chai and Tsim Sha Tsui, is owned by Henderson and Shau Kee Financial Enterprises, the personal investment vehicle of Henderson chairman Lee Shau-kee.

It had a portfolio valued at $9.2 billion, including such assets as the Metro City Phase I shopping centre in Tseung Kwan O, the Sheung Shui Centre Shopping Arcade, 248 Queen's Road East and Java Road 108 Commercial Centre.

In a bid to sweeten the deal to attract investors, Sunlight said last week it would boost its proposed yield to more than 6 per cent from the original 5.5 per cent.

Under a preferential offer, Henderson shareholders were allowed to buy one share in the proposed reit for every 13 Henderson shares held.

HSBC, Deutsche Bank and Macquarie were the arrangers of Henderson's reit offering. Shares in Henderson closed 0.26 per cent lower at $37.80 yesterday.