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
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
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)