Pavilion REIT said to raise RM710m IPO

Pavilion Real Estate Investment Trust, a Malaysian shopping mall trust part-owned by Qatar Investment Authority, is raising RM710 million (US$223 million) in an initial public offering, two people with knowledge of the matter said.

The company plans to sell units at 90 sen apiece to institutions and at 88 sen to retail investors, said the people, who asked not to be identified as pricing details are private. Pavilion REIT had marketed the units at 88 sen to 90 sen.

The IPO will be the Southeast Asian nation’s fourth biggest this year, after share sales by Bumi Armada Bhd, UOA Development Bhd. and MSM Malaysia Bhd. Pavilion REIT said earlier this month it’s seeking acquisitions within the country and throughout Asia.

Kuala Lumpur-based Pavilion REIT, which is expected to list next month, owns the Pavilion mall and an adjacent office tower in the capital’s Bukit Bintang area, which Malaysia is developing to rival Singapore’s Orchard Road. The mall, with a gross floor area of 2.2 million square feet, has an appraised value of RM3.4 billion as of June 1, according to its prospectus, and houses luxury retailers including Bulgari SpA and Prada SpA.

Qatar Investment Authority will be the single largest owner of Pavilion REIT with a 36 percent stake, according to its prospectus. The trust aims to start trading in Kuala Lumpur on Dec. 7.

Pavilion REIT plans to pay out at least 90 per cent of its distributable income on a half-yearly basis from 2012, it said. From the listing date to Dec. 31, 2012, it will distribute 100 per cent of its income. CIMB Group Holdings Bhd, Malayan Banking Bhd and Credit Suisse Group AG are among managers of the sale.

By Bloomberg

China to ease property curbs

SHANGHAI: China will likely relax some property market curbs next year due to concerns that slumping prices could hurt economic growth, a prominent Chinese university said in a report.

China has introduced a range of measures aimed at bringing down property prices in the last year, such as bans on buying second homes in some cities, hiking minimum downpayments for buyers and introducing property taxes.

But Beijing-based Renmin University has forecast that the government would likely relax limits on bank lending to the property sector and purchases of new homes in the third quarter of 2012, according to a report published in the state-run China Securities Journal.

Industry officials and analysts are divided over when the government might ease curbs, originally put in place to cool the red-hot property sector after a surge in prices put homes out of the reach of many.

Chinese Premier Wen Jiabao recently dashed hopes of any change in the short term, saying housing prices should return to “reasonable levels”.

But cash-strapped local governments were heavily reliant on revenue from land sales, and the central government would likely intervene to prevent property prices from falling more than 25%, Renmin University said.

Property investment was also a contributor to economic growth, so Beijing might act to help ensure gross domestic product (GDP) growth which created jobs and prevented social unrest remained strong, it said.

The prestigious university's economic research institute forecast annual GDP growth of 9.2% in 2012, against an estimated 9.4% in 2011.

Official data showed the number of major Chinese cities posting a drop in home prices doubled to 34 in October from September, in a sign efforts to cool the country's surging property market are working.

Housing prices in the capital Beijing, commercial hub Shanghai and the southern cities of Guangzhou and Shenzhen among the most speculative markets all fell slightly in October from September, figures showed.

The report said property prices and sales volume were likely to continue to fall through the first quarter of 2012, but it ruled out a large-scale selloff and a hard landing for the economy.

By AFP

52% of London office blocks owned mostly by German and US investors in 2011

LONDON: British investors own less than half the office properties in London city's financial hub, with foreign ownership of towers such as the Gherkin likely to continue, a report said.

Property company Development Securities said that 52% of city office blocks were foreign owned in 2011, up from 8% in 1980, with German and US investors hiking their stakes considerably over that period.

“City offices are perceived to offer quality and transparency, a safe haven for foreign buyers who have in turn deepened liquidity in the market,” chief executive Michael Marx said in the report, Who Owns the City.

IPD figures show property values fell 50% during the global financial meltdown to August 2009, subsequently rebounding 25%, creating a buying opportunity for cash-rich investors such as sovereign wealth funds, pension funds, insurance firms and real-estate investment companies.

“Traditional owners livery companies, institutions, established property companies have experienced a sharp decline in city office ownership,” Development Securities said, noting these investors now held 17% of the office stock, from 29% in 2005.

In their place, German investors hiked their market share to 16%, from 1% in 1980. US investors held 10%, from zero, while Middle East investors weighed in at 6%, from 3%, the survey found.

The 180m tall Gherkin tower, so-called because of its shape and one of the most distinctive in the city, has been part owned by German property behemoth IVG Immobilien since 2007.

Foreign ownership increased during the global financial crisis, Development Securities said, noting the changing dynamics of globalisation and international investment would continue to be reflected in city office ownership.

“Such resilience would appear all the more remarkable in the light of the city's associations with the failures of the international financial system. What offsets the systemic risk in relation to the city's lack of diversification is the exceptional liquidity that characterises its office market,” it said.

The Development Securities survey also showed the changing profile of owners, with a growing trend towards private ownership by high net worth individuals.

In terms of functional ownership, 41% of the office space was owned by companies in the finance, insurance and real estate sectors, and 57% by financial and business services firms.

By Reuters