Champion Reit seeks US$980m for acquisition
Bonds to fund Langham Place deal
Champion Real Estate Investment Trust, controlled by Great Eagle Holdings, plans to raise up to US$980 million through a convertible bond sale and share placement to fund the acquisition of Langham Place shopping centre in Mong Kok.
Fair Vantage, which is wholly owned by a trustee of Champion Reit, is selling US$600 million worth of five-year convertible bonds to institutional investors. The bonds able to be swapped into a new unit of Champion Reit, according to a sale document given to fund managers.
The bonds are priced to yield 4.75 to 5.25 per cent semi-annually, while the conversion price would range at a 25 to 32 per cent premium over the final pricing of a dedicated share placement, which was coming to the market at the same time, according to the document.
Champion Reit is also tapping the market for up to US$380 million from a share sale to help fund part of the acquisition costs, according to another sales note.
The issuer is selling as many as 824 million new Champion Reit units at HK$3.60 to HK$3.80 each, representing 27.7 to 29.3 per cent of its existing issued capital, or 18 to 18.6 per cent of the enlarged issued capital, the sale note shows.
The offering is at a discount of up to 6.49 per cent on the firm's closing price of HK$3.85 yesterday. Proceeds from the Citi-led bond sale and share placement will mainly go to finance the acquisition of Langham Place, which is scheduled to be completed by the end of next month.
'As far as I know, Citi has helped the company launch a global roadshow earlier and received a strong response. Most investors outside Asia are still bullish on the outlook for Hong Kong's retail sector, given the strong back-up from mainland visitors,' a source said.
Great Eagle, a key landlord on Hong Kong Island, sold its stake in Langham Place including offices, a shopping centre and car park, to Champion Reit for HK$12.5 billion in February.
The sale was equivalent to HK$12,519 per square foot for the retail portion and HK$6,815 per square foot for the office portion, which represents an 11.8 per cent discount to the appraised value of HK$14.1 billion.
