Based on yield alone, investors should stick with well-tested CapitaRetail China Trust rather than subscribe to the Dynasty REIT offering from ARA and Li Ka-shing, Lim & Tan Securities says.
It notes CRCT’s 3Q12 dividend suggests a 5.9% yield, in line with Hong Kong-listed Hui Xian, which was ARA and Li’s first CNY-denominated REIT; Hui Xian is still trading around 20% below its IPO price, the house notes.
“Dynasty is tempting investors with an indicative yield of 6.8%-7.1% for 2012 and 7.0%-7.3% for 2013. But that is because of the rental support which will come from the IPO proceeds (i.e. getting partly paid with your own money),” it says, noting without the support, the yield would be 3.2% and 4.2% respectively. L&T says Dynasty is best-suited for investors sitting on surplus CNY deposits. Dynasty begins trade on Oct 30.
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