Sunlight Reit dips on trading debut

Unit price drops 6.5pc as investors show distaste for real estate trusts despite frenzy over initial offerings

Shares of Sunlight Real Estate Investment Trust, set up by Henderson Land Development, sank below their offer price on their listing debut yesterday, underscoring investor distaste for Hong Kong-listed reits even during the current frenzy over initial public offerings.

The only first-day loser in the recent wave of new issues, Sunlight opened at a high of HK$2.60 and then tumbled to as low as HK$2.40 before closing at HK$2.43, down 6.54 per cent from the offer price.

The most recent stock to dip below its offer price on debut was toymaker Smart Union Group (Holdings), whose shares on September 29 ended the day down 1 per cent from the IPO price of HK$1.10.

'It's a surprise that the reit sank because it closed 5 per cent higher in the grey market [on Wednesday] and investors firmly believe all recent IPOs will gain and the problem is just how much [they] will gain,' said Andy Lam, an investment research associate director at Harris Fraser (International). 'No one expects any would fall amid the recent IPO frenzy.'

The last of the four other Hong Kong-listed reits to come to market, Champion Reit in May, also sank on its first day, diving 15.68 per cent. The decline forced other potential rivals, including Sunlight, which had been due to come to market as early as before the summer, to delay their listings.

Three of the five reits on the Hong Kong exchange are trading below their offer price. The only major mover is Link Reit, a government spin-off and the first reit to list in Hong Kong after the trusts were allowed on the market late last year.