Capital Calls: SF’s troubles ruin perfectly good REIT

SF Express courier boxes are displayed in this illustration photo at the company's headquarters in Shenzhen, China November 5, 2015. REUTERS/Bobby Yip

NEW YORK, May 17 (Reuters Breakingviews) - Concise insights on global finance.


NOT DELIVERING. The disappointing debut of SF Holding's (002352.SZ) $300 million real estate investment trust shows even decent assets can’t distract Chinese investors from the parent’s troubles. The $46 billion Shenzhen-listed logistics company on Monday spun off three properties in a Hong Kong REIT listing. The issue price equated to a forecast rental yield of 5.5% for 2021, per an estimate by Refinitiv IFR, but when trading opened it promptly plunged to close 16% below its IPO price.

The reaction underscores broader concerns about the courier giant’s financial health. In April SF shocked investors when it reported a $152 million net loss for the three months to March - its first quarterly loss since going public - due to soaring costs of expanding new businesses amid a fierce price war. SF shares have lost half their value since February.

The discount on the logistics properties may seem extreme. On the other hand, tenants connected to SF Holdings provide four-fifths of the REIT’s revenue. Investors have cause to take a holistic view. (By Yawen Chen)

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