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. Phillip Securities corporate finance officer Stephen Tse blamed Sunlight's debut loss on investors' disfavour for reits. Despite the current IPO frenzy and red-hot stock market, retail investors placed orders for Sunlight just 8.34 times the units slated for them, and the institutional tranche was five times covered, leaving Sunlight the only offering in the latest IPO wave not to spark its clawback mechanism. Sunlight chief executive Keith Wu Shiu-kee, at the listing ceremony yesterday, played down the loss, saying the comparison with other initial offerings was unjust. 'A reit is a long-term investment sharing some features of equities and bonds, so its price moves are relatively tiny,' Mr Wu said. 'Therefore, it is not on the same ground to compare the reit with the recent China-concept IPOs.' As Sunlight tripped out of the box, mobile-telephone battery producer Scud Group and radial tyre cords maker Xingda International Holdings surged on their debuts. Shares of Scud soared 50.99 per cent to close at HK$3.05 from the offer price of HK$2.02, while shares of Xingda closed at HK$3.52, up 14.29 per cent from the offer price of HK$3.08. Their debut gains were lower than the market expected.