Dynasty REIT is offering 893,162,000 to 900,832,000 units at an offering price of between RMB 4.40 to RMB 4.70 or S$0.855 to S$0.915. The offer will close on 24 Oct 2012 at 12pm and start trading on 30 Oct 2012 (Mark this date for the "LKS" effect). Between 839.274m to 846.944m units will be offered to the Placement and 53.888 units will be offered to the public.
Dynasty REIT invests into commercial real estate in China. The initial portfolio comprise Nanjing International Financial Center, Shanghai International Capital Plaza and Tianxing Roosevelt Center. The pictures below for your ease of reference.
The annualized yield is between 6.8% to 7.1% for FY 2012 and 7.0% to 7.3% for FY2013. Please note the following "unique" financial engineering features.
There is a DPU support arrangement where RMB 491m of the proceeds raised from the offering will be utilized for payment of distributions and the Sponsor has waived its pro-rata distributions till 31 Dec 2017. In the absence of the above, the yield will drop to 3.2% and 4.1% respectively. What is this ah?! Sheep Skin come from the Sheep? Investors pay upfront and then receive it back later - sounds like a recent gold scheme? :-P hahaha.
According to the prospectus, the current rental market is higher than the "expiring rent", thus there will be some upside going forward.
The real yield is too low!
After stripping out the DPU support and the Sponsor Waiver, the yield is really too low for my liking and i don't like such financial engineering stuff. Maybe they pick this up from Perennial China Retail Trust?
Why can't they fix the price first?
It is funny why they couldn't fix the price before launching the public offer. Are they still doing book building with institutional investors at the same time?
Twice bitten thrice shy
Mr. LKS is a very shrewd businessman and based on my past experiences, he doesn't leave anything on the table and will even take away the table cloth. So this is a no-no deal for me personally but again, like the Religare Health Trust, i will probably be allocated some units...
I will give it a chopped chilli rating and officially declare the end of the Singapore IPO market for 2012. hahaha