Henderson Land Development Mandates Banks to Launch US$400m to US$500m REIT

Strategic Insights -

Henderson Land Development, a major property developer in Hong Kong, has reportedly mandated Macquarie, Deutsche Bank, and HSBC to help spin off a US$400 million to US$500 million real estate investment trust (REIT). The trust is expected to be launched in the second quarter, becoming the city's fourth REIT. Analysts suggest that the developer's spin-off plan is still in its preliminary stages, with several property types being considered for injection into the REIT, including shopping malls and non-core commercial assets.

Key Takeaways:

  • Henderson Land Development has mandated Macquarie, Deutsche Bank, and HSBC to help spin off a US$400 million to US$500 million REIT.
  • The REIT is expected to be launched in the second quarter, becoming the city's fourth REIT.
  • Henderson has 1.22 million square feet of retail space in Metro City in Tseung Kwan O and more than 500,000 sq ft in Sunshine City Plaza in Ma On Shan.
  • The developer has a large office and industrial property portfolio, including AIA Tower in North Point, Righteous Centre in Mongkok, and Winning Centre in San Po Kong.
  • The yield of Henderson's REIT could set a benchmark, with analysts suggesting that a yield of more than 5% would be attractive.
  • The current yields of similar REITs, such as Link REIT and Prosperity REIT, have fallen significantly due to strong rallies in their share prices.
  • Celestial Asia Securities research director Herbert Lau has doubts on the likely property mix of Henderson's REIT, citing low rental growth potential of the company's office-commercial buildings and industrial-office properties.
  • A REIT spin-off could benefit Henderson, allowing the developer to tap into more funding reserves for potential mega-projects such as the West Kowloon cultural district.

Statistics:

  • Henderson Land Development has $4.34 billion in cash reserves.
  • The Link REIT yield has fallen to 4.2%, while the Prosperity and GZI reits have yields of 4.6% and 5.6%, respectively.
  • Henderson's share price has surged 42.2% since listing.
  • The REIT spin-off is expected to be launched in the second quarter.

Sources:

  • Fiona Lau and Peggy Sito