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

The Shanghai Stock Exchange has greenlit the spinoff and listing of New World Development's real estate investment trust (Reit) for an anticipated offering of 3.82 billion yuan (US$570.36 million), marking the inaugural listing by a Hong Kong developer. The company plans to purchase 20% of the total units at the launch, while external investors will hold the remaining 80% for an aggregate 3.05 billion yuan.

New World intends to subscribe for a 20% share in the newly-listed Reit and will dispose of the holding company of Shanghai Hong Kong New World Tower, which includes Shanghai K11 Art Mall and Shanghai K11 ATELIER NWT, for 4.01 billion yuan to the Reit. The company anticipates generating net proceeds of 3.24 billion yuan from the asset sale and the acquisition of its stake in the Reit.

Echo Huang, CEO of New World, stated that the proposed spinoff will provide the group with access to new capital sources from both institutional and retail investors in the region. Additionally, two other K11 brand assets in Hangzhou and Shanghai are expected to be completed soon, which will aid the developer's strategy to recycle capital, enhance liquidity, and reduce debt.

This listing comes as New World, the most indebted developer among its Hong Kong counterparts, strives to alleviate debt, dispose of assets, and improve liquidity amidst stringent credit conditions and a struggling Hong Kong property market. A proposed US$4 billion tie-up with New World by Blackstone was rejected when the property developer refused to relinquish control.