China Outlet Mall REIT Falls Short with $302M Singapore IPO

Ping An Real Estate-backed Sasseur REIT has driven Singapore’s biggest equity offering this year by raising S$396.0 million ($301.7 million) via a public listing on the Singapore Exchange. Chinese e-commerce giant JD.com is among the REIT’s cornerstone investors.

Including cornerstone stakes, the public offering, which kicked off Wednesday evening, is expected to raise S$396 million for the outlet mall REIT, falling some 26 percent short of the lower end of the S$500 million market expectation which was reported last month.

The offering, which concludes on Monday, is making available 266.6 million units at S$0.8 ($0.6) each, of which 252.8 million units are placement shares and 13.75 million units are for public offer. The trust is forecasting a distribution yield of 7.5 percent for 2018, and 7.8 percent yield for next year.

The REIT’s initial portfolio is comprised of four mainland outlet malls, including two in the southwestern metropolis of Chongqing, one in Kunming, capital of southern China’s Yunnan province, and another in Hefei, capital of the eastern province of Anhui. The malls have an average occupancy rate of 95 percent, according to the REIT’s registered prospectus.

JD and Haitong Lead Cornerstone Investors

Describing itself as the first outlet mall REIT to be listed in Asia, the REIT secured 12 cornerstone investors who provided 46.1 percent of the gross proceeds expected from the offering and the issuance of the cornerstone units. Singapore logistics provider YCH and mainland investment bank Haitong International Securities join JD.com as the REIT’s cornerstone investors, along with Bangkok Life Assurance, CKK Holdings Pte, Credit Suisse AG, DBS Bank, DBS Vickers Securities, Secoo Holdings and other investors.

“We are delighted with the positive response to Sasseur REIT’s IPO, with strong interest from leading players in China’s e-commerce space and Singapore’s retail and supply chain sectors, institutional funds as well as high net worth individual investors,” said Xu Rongcan, Chairman of Sasseur Group in a statement. “This attests to Sasseur REIT’s unique investment proposition which offers investors the opportunity to benefit from the strong growth potential in the fast-growing outlet mall industry driven by the growing consumption power of the expanding middle-class population in the PRC.”

Ping An Real Estate Among Sasseur’s Pre-IPO Investors

Shanghai-based retail developer and operator Sasseur Group, which received early stage investments from Ping An Real Estate, LVMH affiliated fund manager L Capital, L Catterton Asia Advisors and Warburg Pincus, opened its first shopping centre in Chongqing in 2008. Warburg Pincus had exited its stake in Sasseur well prior to the IPO, according to a source familiar with the US private equity firm’s investments who spoke with Mingtiandi.

Sasseur has since built a portfolio of nine outlet malls in second-tier cities including Chongqing, Hangzhou, Hefei, Xi’an, Changchun, Guiyang, Nanjing and Kunming. Eight of the retail hubs already have reached at least 90 percent occupancy, according to Sasseur’s corporate website.