New World Development gets Shanghai bourse nod for $570 million REIT listing

Sept 21 : New World Development said on Monday the Shanghai Stock Exchange had approved the spinoff and listing of its REIT for an expected offering size of 3.82 billion yuan ($570.36 million), the first by a Hong Kong developer.

Here are the details:

• The company said it expects to subscribe for 20 per cent of the total units at listing, while external investors would take the remaining 80 per cent for an aggregate 3.05 billion yuan.

• As part of the transaction, New World will sell the holding company of Shanghai Hong Kong New World Tower, which comprises Shanghai K11 Art Mall and Shanghai K11 ATELIER NWT, to the newly listed REIT for 4.01 billion yuan.

• New World expects to generate net proceeds of 3.24 billion yuan from the asset sale and the purchase of a 20 per cent stake in the REIT.

• "The proposed spinoff will open up the opportunity for the group to access new forms of capital from institutional and retail investors in the region," said Echo Huang, CEO of New World, in a separate statement.

• The developer added that two other assets under the K11 brand in Hangzhou and Shanghai are expected to be completed in the near future, which will be important to its strategy to recycle capital, improve liquidity and deleverage.

• The REIT listing comes as New World, the most heavily indebted developer among its Hong Kong ​peers, seeks to cut debt, dispose of assets ⁠and bolster liquidity amid tight credit conditions and weakness in Hong Kong's property sector.

• Blackstone walked away from a proposed $4 billion tie-up with New World after the property developer refused to cede control, Bloomberg News reported in May.