China Merchants Shekou Industrial Zone Holdings, which engages in the development and operation of industrial estates, communities and cruise businesses, said in an exchange filing on Monday night that it was launching a share offering of its real estate investment trust (reit) on the Hong Kong stock exchange’s main board. Much of the listing details for China Merchants Commercial Real Estate Invest Trust (CMC Reit), such as the amount to be raised and profit forecast of the assets in the reit, were redacted. But Bloomberg has previously reported the listing could raise about US$800 million. The reit is sponsored by Shenzhen-listed China Merchants Shekou Industrial Zone Holdings, which will be a major shareholder of the reit. The sole listing agent is Citi, while the financial adviser is China Merchants Securities (Hong Kong). The reit manager is Fair Winner Enterprises. The announcement follows news last week that three companies had filed for initial public offerings (IPOs) in Hong Kong, suggesting sentiment may be starting to improve after three months of increasingly volatile anti-government protests that have shaken social and financial stability. According to the redacted filing, the CMC Reit portfolio will initially comprise five properties in Shekou, Shenzhen. Is IPO sentiment returning to Hong Kong as protests drag on? These include a grade A office building called New Times Plaza, three office building complexes that are located in Shekou Net Valley, a business hub for hi-tech companies and start-ups, and a shopping centre in Shekou subdistrict called Garden City Shopping Centre. While the reit’s initial focus will be properties in the “Greater Bay Area”, it will also include properties in Beijing and Shanghai at a later stage. As of 30 June this year, the five properties had an aggregate gross floor area and gross rentable area of about 262,378.9 square metres and 249,988.3 square metres, respectively, and an average occupancy rate of 81 per cent. The total appraised value of the properties as of June 30 was 6.5 billion yuan (US$906.3 million). Hong Kong faces a drought of initial public offerings as valuations fall According to preliminary documentation, the listing’s risk factors include future changes in government policy, and those related to the Greater Bay Area, where Shekou is located, which could adversely affect the prospects and results of CMC Reit. “CMC Reit’s results of operations may be adversely affected if the … property manager fails to operate and manage the properties in an effective and efficient manner,” it said. Frontier Shekou, the British Virgin Islands-based holding company of the five properties in the portfolio, had a total profit of 391.9 million yuan, down 50 per cent from 787.4 million yuan a year ago, for the six months ending on June 30 this year. Its revenue dropped 4.6 per cent to 182.3 million yuan, from 190.7 million yuan. If launched successfully, CMC Reit will be the first reit to list in Hong Kong since Spring Reit’s flotation in December 2013. Spring Reit closed at HK$3.25 on Monday, with a market capitalisation of HK$4.16 billion, according to the Hong Kong stock exchange. Hong Kong bourse posts record first-half earnings as funds poured in The bourse is home to 11 reits, the biggest being Link Reit, a Hang Seng Index constituent that closed at HK$86.15 on Monday, with a turnover of HK$884.5 million.