Swire Properties rises 2.74pc in market debut
Swire Properties made a less than spectacular debut on the stock exchange yesterday despite opening at a discount of more than 40 per cent to its underlying asset value.
Shares of Swire Properties, which owns Pacific Place in Admiralty and Cityplaza and Taikoo Place in Quarry Bay, opened at HK$16.80, against its adjusted book value of HK$29.20 per share. The property firm, which was spun off from Swire Pacific, closed 2.74 per cent higher at HK$17.26. Swire Pacific dropped 3.67 per cent to close at HK$76.05.
Li Kwok-suen, fund manager at Phillip Capital Management, said most of the city's listed landlords traded at discounts of 20 per cent to 30 per cent to their net asset values.
Amid expectations of softening in Hong Kong's office rental market and the central government's move to curb mainland property prices, Li said investors would be cautious.
Property consultancy Knight Frank expects grade-A office rents will fall 10 per cent to 15 per cent in the first half of this year as companies become more sensitive to costs.
'Investors are also wary Swire Properties will issue a cash call in the short term as its mainland developments require huge capital expenditure for the next two years,' Li said.
Last August, Swire Pacific said HK$10.75 billion would be invested into property up to 2014.
The company raised no funds from the listing which came by way of introduction.
In the second half of last year, the company spent HK$4.25 billion in Hong Kong and on the mainland. Another HK$2.72 billon has been earmarked for property investments this year and HK$1.71 billion for next year.
Swire Properties chairman Christopher Pratt said the group had sufficient capital after selling the Festival Walk shopping and office complex in Kowloon Tong last year.
'We sold Festival Walk for a fairly princely sum, so we have absolutely adequate capital for our immediate plans,' he said.
In July last year, Swire Pacific sold its entire interest in Festival Walk for a record HK$18.8 billion.
Chief executive Martin Cubbon said the company had the resources to buy land in Hong Kong and the mainland over the next 12 to 18 months.
Cubbon said the sale of yuan- denominated bonds was a possibility once the remittance mechanism is in place. 'It is quite possible that we will dispense sizeable funds in the course of the next 18 months. Then we might indeed look to raise money in the bond market or from banks.'