Cheung Kong (Holdings)' first real estate investment trust (REIT) was oversubscribed yesterday after being launched in Singapore, according to a source familiar with the company. Three strategic investors took up almost 20 per cent of the Fortune REIT in the initial public offering yesterday, the first fund-like, pooled-property investment launched by a Hong Kong property company. The strong reaction may encourage other property firms to consider launching REITs to raise funds. Cheung Kong's REIT offer, which began in Singapore yesterday afternoon, closes on August 6. The trust will begin trading on the Singapore Stock Exchange on August 12. The company aims to raise about $2.23 billion by selling five shopping malls - The Metropolis Mall, Ma On Shan Plaza, the Household Centre, Smartland and Jubilee Court Shopping Centre. Fortune REIT issued a total of 473 million units but only about 30 per cent was offered in the IPO. US Capital Research and Management Co (Hong Kong branch) and Societe Generale Bank & Trust (Luxembourg) each took 4.9 per cent of the offer, and DBS Bank took 9.9 per cent. Cheung Kong took 37.4 per cent and Hutchison Whampoa, part of the same group, took 12.5 per cent. Hutchison owned 50 per cent of The Metropolis Mall, with Cheung Kong holding the other half. Cheung Kong fully owned the other four shopping malls. The units were offered at $4.60 to $4.75 each, with the final price to be fixed on August 6. Brokers said the REIT probably would be priced at the top end of the range given the strong response. The five shopping malls, valued at $3.27 billion by Chesterton Petty as at the end of May, recorded gross revenue of $163.7 million last year. Cheung Kong will distribute all rental income after expenses, offering an annualised tax-exempt yield of 6.5 per cent to 6.7 per cent. Company director Justin Chiu Kwok-hung has been appointed chairman of the REIT management company and John Lim Hwe-chiang chief executive. The Cheung Kong REIT is the third in Singapore, which began promoting such products last year. Hong Kong's Securities and Futures Commission (SFC) is expected to announce regulations for local REITs in the next few days. Mr Chiu said Cheung Kong had not waited for similar products to be allowed in Hong Kong because it considered the REIT a timely investment. 'There have been a lot of queries about why Cheung Kong has taken such a move and why now - without waiting until Hong Kong REIT regulations are finalised,' he said at the IPO launch ceremony in Singapore. 'At Cheung Kong, we see REITs as not only an appropriate financial instrument for the group, but most importantly, a timely investment tool for investors in this low-interest environment.' Mr Chiu said Cheung Kong chose to launch the REIT in Singapore because of the city state's successful development of a market. He said plans for the trust had begun in the fourth quarter last year. A Cheung Kong source said the company would consider launching a REIT in Hong Kong after reviewing the regulations to be announced by the SFC.