Dual-listed Fortune Reit to delist from SGX mainboard

HONG Kong and Singapore dual-listed Fortune Reit will delist from the mainboard of the Singapore Exchange (SGX), citing administrative overheads, costs of compliance and low trading volume in Singapore as some reasons for the move.

Fortune Reit's manager is ARA Asset Management.

SGX has advised that it has no objection to the delisting, subject to conditions like Fortune Reit bearing costs like fees for the unit transfer process and a three-month notice period before the delisting date, it said in a Wednesday bourse filing in Singapore.

Fortune Reit has also already applied and received in-principle approval from the Monetary Authority of Singapore (MAS) to withdraw its authorisation as a collective investment scheme in the Republic.

It is currently primarily listed in Hong Kong and secondary listed in Singapore following a December 2015 conversion exercise of its listing status from a primary listing in Singapore, and has authorisation as a collective investment scheme in both countries.

ARA Asset Management said it believes the delisting from SGX will "allow Fortune Reit to streamline its compliance obligations, reduce its legal and compliance costs which ultimately have to be borne by unitholders of Fortune Reit, and focus its resources on its business operations".

It added that there has been a "continuous migration of unitholders from Singapore to Hong Kong" since the December 2015 conversion.

As at Wednesday, there were 374.9 million units listed on SGX, which comprise about 19.4 per cent of Fortune Reit's total units in issue.

Trading volume in Hong Kong also "significantly exceeds" that of SGX's, the manager said.

The average daily trading volume for the 12 months from June 2018 to May 2019 was approximately 2.4 million units on the Stock Exchange of Hong Kong, as compared with about 62,000 in Singapore.

ARA Asset Management said it believes that consolidating trading in Hong Kong will increase liquidity and improve the effectiveness of any future capital-raising activities.

"Fortune Reit now has a closer nexus to Hong Kong" since the conversion, it said, with all of Fortune Reit's properties located in the territory. The unit price is also quoted in Hong Kong dollars on both Hong Kong and Singapore bourses.

The manager added: "Fortune Reit's primary listing on the HKSE is sufficient to meet its future debt and equity fundraising requirements to meet its operational needs and future development."

There will be no change to the total number of units in issue, and unitholders' voting rights and entitlement to distributions attached to the units in issue will not be affected by the transition as a result of the delisting.

Central Depository (CDP) depositors who do not request for a designated broker transfer within the unit transfer period and/or those that do not take any action within the transfer period and still have units with CDP by the delisting date will have their units withdrawn from CDP.

They will be issued physical unit certificates and their names will be entered into Fortune Reit's Hong Kong unit register as the holders of the units. Such depositors will have to make their own arrangements to lodge their units with the Central Clearing and Settlement System at their own cost or with securities brokers.

Fortune Reit closed flat at 10.6 Hong Kong dollars on Wednesday before the announcement.