German office Reit with Chinese backer to raise S$369m in IPO

SINGAPORE'S first listed real estate investment trust (Reit) with office assets in Germany is set to make its debut this month with a S$369 million initial public offering that is heavily backed by a Chinese tycoon.

IReit Global Group is selling 167.73 million units at 88 Singapore cents per unit - an offer price that translates to a projected distribution per unit yield of 8 per cent next year, its prospectus yesterday showed.

The offering consists of an international placement of 156.37 million units to investors residing outside of the US, and a public offering of 11.36 million units in Singapore.

Tong Jinquan, a property magnate tycoon ranked by Forbes as China's 36th richest man, will also subscribe for a separate 251.6 million units at the offer price. This means he will taking up 60 per cent of the 419.33 million IPO and subscription units.

Mr Tong is said to be the go-to investor for Reit offerings in Singapore, given his large S-Reit portfolio, a senior banker told BT.

The IPO has also attracted the attention of one local property player: the owner of Soilbuild Group Holdings, Lim Chap Huat, who has agreed to subscribe for 79.68 million placement units, or 19 per cent of the aggregate 419.33 million units.

IReit's IPO portfolio comprises four freehold office properties located in key German cities - Bonn, Darmstadt, Münster and Munich.

The properties - with the oldest built in 2007 - should require little capital expenditure between now and the end of 2016. They enjoy full committed occupancy, with a weighted-average lease expiry of 7.6 years. The leases are anchored by a wholly owned subsidiary of Deutsche Telekom.

"IReit will give the investing community a unique opportunity to participate in the growth and strength of Germany's economy, the largest economy in the Eurozone," said Itzhak Sella, founder and CEO of the Reit manager.

The money raised from the IPO will be used to repay lenders who had pre-funded the acquisition of the properties, and for working capital purposes.

The public offer will open at 9am today and close at noon on Aug 11. Trading is expected to commence at 2pm on Aug 13.