Hopewell hopeful over share sale

Property company paints rosy picture of prospects as analysts say it may have to offer big discount to attract investors to its shares

PUBLISHED : Thursday, 06 June, 2013, 12:00am
UPDATED : Thursday, 06 June, 2013, 4:07am

Hopewell Hong Kong Properties will see positive rental growth in its existing real estate portfolio in the short term, with improved tenants, managing director Thomas Jefferson Wu promised potential investors yesterday.

Wu painted a rosy picture of the property concern at the company's press conference yesterday to outline its proposed listing.

However, the positive outlook may not help the proposed listing. Analysts said investors have choices nowadays as major property investment companies are trading at a big discount.

In the longer term, the upside potential for Hopewell will be at its new rental assets in Wan Chai, which will house its new Hopewell Centre II and 200 Queen's Road East developments. New tenants are paying about HK$50 per gross square foot of office space at Hopewell Centre in Wan Chai, against existing rents of HK30 to HK$31 per sq ft, Wu said.

According to a report from BNP Paribas, Wharf (Holdings), Swire Properties and Hysan Development are trading at between 30 and 45 per cent of their net asset values.

Adrian Ngan Wai-hung, an executive director of real estate equity research at Citic Securities, said: "Hopewell Hong Kong may need to offer the bottom price range and a big discount to attract investors."

The offer price for Hopewell Hong Kong is expected to lie between HK$15.30 and HK$17.80 a share.

Assuming an offer price of HK$16.55 a share, the mid-point of the indicative range, the company is expected to raise net proceeds of about HK$5.43 billion.

According to the company, 40.5 per cent of the net proceeds will be used on capital expenditure for the development of Hopewell Centre II, another 31.3 per cent will be used on the repayment of a refinancing facility, and the remaining 28.2 per cent will be used on acquisition and development of amalgamation properties and for working capital.

Hopewell has a portfolio of properties with aggregate gross floor areas of about 3.5 million sq ft as at March 31.

Hopewell Centre II, according to the company, is expected to be a 55-storey mixed-use development, which will be an extension of the Hopewell Centre.

In the proposed listing, a total of 340 million shares will be offered for sale, made up of an international offering of 289 million shares, and a Hong Kong public offering of 51 million shares.

Dealings in the company's shares are expected to commence on the main board of the Hong Kong stock exchange on June 19.