HONG KONG May 12 Langham Hospitality Investments set a yield for 2013 of between 5.65 and 6.5 percent for its Hong Kong initial public offering of HK$3.96 billion to $4.57 billion (US$511 million to $589 million), IFR magazine reported on Saturday.
The offering, which will see Great Eagle Holdings Ltd spin off its Langham hotel chain, is one of several deals planned for coming weeks from companies looking to benefit from demand for commercial property in Hong Kong. The pricing of this deal could set a benchmark for the coming string of real estate investment trust (REIT) deals.
Property and infrastructure group Hopewell Holdings is looking to raise as much as $800 million from the spin-off of its property and hospitality business, while New Century Hotel Group, China's biggest privately owned hotel chain operator, plans to raise up to $300 million with its own REIT.
As central banks print cash to boost moribund economies, investors in Asia wanting to hedge against rising prices are dumping gold and doubling down on property, Reuters reported on Friday.
Investors are driven by the search for yield as surprisingly benign inflation dims the appeal of bullion, but it's a risky play given lofty valuations for real estate.
The trend is most visible in the frenzy around REITs in Asia, where issuance ex-Japan more than quadrupled to $4.33 billion through early May from the same period last year and valuations are at their highest since before the 2008 financial crisis. [ID: nL3N0DJ12F]
The yield from the Langham business trust will go down to 5.23 percent to 6 percent if the dividend waiver from parent Great Eagle is removed, IFR reported citing two sources familiar with the matter.
Great Eagle has agreed to waive the dividend on a portion of the shares it will hold, according to documents filed with the Hong Kong Stock Exchange.
The company will offer 852 million shares at an indicative price range of HK$4.65 to HK$5.36 each. Bookbuilding will start on Monday and pricing is set for May 22.
The Hong Kong hotels to be listed include Langham, Langham Place Hotel and Eaton.
Deutsche Bank and HSBC are sponsors, with Citi joining as a bookrunner for the deal.
(Reporting By Fiona Lau of IFR, additional reporting by Elzio Barreto and Nishant Kumar, writing by Lawrence White)