Swire considers turning Festival Walk into reit

Swire Pacific, which owns Pacific Place mall in Admiralty and Cityplaza mall in Taikoo Shing, is studying a spin-off of Festival Walk shopping mall into a real estate investment trust, chairman Christopher Pratt said.

A final decision is unlikely to be reached in the next several months, he said.

The group did not indicate how much it hoped to raise from the proposed reit's initial public offering. Sources earlier said it would be at least US$400 million.

Banks including HSBC, UBS and Citi were pitching for a mandate, said the sources.

Swire's statement came three days after Sun Hung Kai Properties, Hong Kong's largest developer by market value, said it would consider reviving its reit offering next year if market conditions were appropriate.

In June last year, SHKP scrapped a plan to spin off 10 commercial properties into a reit called Sun Millennium that aimed to raise HK$3.1 billion.

Another developer, Wharf (Holdings), has decided not to go ahead with its reit offering, according to sources. Market sources said Wharf originally intended to raise at least US$400 million but postponed the sale due to unfavourable sentiment.

Mr Pratt said Swire would use the proceeds of the spin-off to expand property investment in the mainland. It would not scale down its investments in Hong Kong, he said.

Swire owns a property portfolio of 22 million sq ft in the mainland, where it has more than 12 billion yuan worth of investments, and in Hong Kong.

The developer took ownership of Festival Walk in Kowloon Tong in January last year by acquiring the 50 per cent it did not already own from Citic Pacific for HK$6.18 billion.

The commercial complex consists of a 980,000 sq ft shopping mall, 229,000 sq ft of office space and 850 car parking spaces.

Shares of Swire, which is also a shareholder of Cathay Pacific Airways, closed 0.8 per cent higher at HK$94.25 yesterday.

Proposed expansion

Swire would use the proceeds to expand mainland investments

Sources say with the planned reit issue, Swire hopes to raise at least, in US$400m