New listing focuses on China's real estate

A TRUST focusing exclusively on China's commercial real estate market began trading on the Singapore Exchange yesterday.

Treasury China Trust (TCT) owns three income-yielding properties in Shanghai, with another two projects - in Shanghai and Beijing - due to be completed over the next two years.

The trust is sponsored and managed by Dublin-based property group Treasury Holdings.

The properties and developments used to be held by Creo, a London-based member of the Treasury Holdings group.

TCT acquired Creo and so gained indirect control over the Chinese properties. Creo subsequently delisted from AIM, London's secondary board.

Mr Richard Barrett, chairman of Treasury Holdings Real Estate, told a briefing yesterday: 'We've decided to move the company closer to its natural investor base.

'One of the difficulties that arose with AIM was that the investors were almost wholly European.

'It's just easier for Asia-based investors to understand the dynamics of the property market in China.'

Treasury Holdings Real Estate will manage TCT.

TCT has projected a tax-free annualised distribution yield of 5.8 per cent for the financial period ending Dec 31.

It has proposed a dividend of five cents per unit for the final six months of this year.

Treasury Holdings Real Estate chief executive Richard David said a minimum of 80 per cent of net rental income will be distributed to unit holders for the first three years of TCT's listing.

The percentage will then be reduced to 50 per cent because of the expected increase in net rent and the allocation of profits to new investments.

Mr David said a maximum of 30 per cent of total assets can be under development at any one time. This is higher than the percentage for real estate investment trusts, he added, and allows TCT to capitalise on China's high growth.

The trust had a market capitalisation of $430 million as of June 14 with a portfolio valued at 9.19 billion yuan (S$1.8 billion) as of the end of last year.

Mr David said that as its Chinese properties are denominated in yuan, TCT will likely benefit from the Chinese government's announcement over the weekend that it will allow the gradual appreciation of the currency.

Trading in the mainboard-listed TCT kicked off at 2pm yesterday but no trades were completed. At the close of trade, the 'bid' price was $1.70 and the 'ask' price was $1.85.

Source: Straits Times, 22 Jun 2010