ICSC: International Council of Shopping Centers

World's largest REIT IPO ready to launch in Hong Kong

The Hong Kong Housing Authority is whipping up a storm of excitement as it prepares to launch what is being pegged as the world's largest initial public offering of a REIT.

Link REIT, as the entity is to be called, will raise between $2.7 billion and $4 billion if it begins trading on Dec. 20, as expected. That would make Link REIT the largest REIT IPO on record, according to Barry Vinocur, editor of Realty Stock Review, a newsletter for stocks linked to real estate.

Link REIT will invest the proceeds in about 180 neighborhood shopping centers that serve residents of government housing. The centers comprise a total of about 10.2 million square feet of gross leasable area. Link REIT's holdings will also include a 79,000-vehicle parking facility, according to published reports.

Last week about 1.4 million application forms were handed out to Hong Kong investors looking to buy the stock, the South China Morning Post reports. The offering is also drawing the attention of ING Clarion and other large investment managers around the world, says Vinocur.

“This is a high-profile deal because of its size," said Vinocur. "But essentially, it is part of a larger theme, which is the globalization of the REIT vehicle, and REIT-like vehicles.”

One thing that could delay the offering past Monday is that the IPO is being challenged by a lawmaker who says the Housing Authority has no right to sell off its assets.

Link REIT is not the only retail estate public offering setting the city abuzz. Singapore-based DBS Bank says it hopes to launch a $2 billion REIT that would hold about six shopping centers in China's southern region. If that REIT launches as expected in 2005, it will the first to hold properties in mainland China, the South China Morning Post reports.

In addition, executives at a firm called Fortune REIT are debating whether to launch a secondary offering to trade on the Hong Kong Stock Exchange. The initial offering was issued on the Singapore Exchange.