There have been a number of new initial public offerings (IPOs) in Singapore’s stock market in recent months.
One of the larger IPOs this quarter would be EC World REIT (SGX: BWCU), a real estate investment trust which got listed only in July. The REIT has positioned itself as a trust that invests in real estate in China that are used mainly for e-commerce, supply-chain management, and logistics purposes.
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Here are three things investors might want to know about EC World REIT.
A billion-dollar portfolio
The REIT is not small by any measure. It owns six properties in Hangzhou, China with a collective value of RMB6.4 billion (S$1.3 billion). These properties currently have a weighted average occupancy rate of 92.3%.
Apart from the six properties, EC World REIT also has opportunities for future growth as its sponsor (more on this shortly) has given the REIT the right of first refusal (ROFR) for two properties that are currently under development.
Moreover, China’s e-Commerce market is expected to continue growing at double-digit percentages based on data from market researcher Analysys Consulting Ltd that are found in EC World REIT’s IPO prospectus.
EC World REIT is sponsored by ForChn Holdings Group, a key logistics operator in China. In fact, ForChn Holdings is one of the founding members of Cainiao Network Technology Co. Ltd., a well-known logistics joint-venture with Chinese e-Commerce titan Alibaba Group. This means that EC World REIT’s sponsor has deep expertise on the logistics and e-commerce market in China.
The REIT’s distribution
EC World REIT had a high yield at listing. Based on its IPO price of S$0.81 per unit, the REIT had projected a 7.1% yield for 2016 and a 7.3% yield for 2017.
Given that the REIT’s unit price is currently S$0.77, the forward yields have become even fatter at 7.5% and 7.8% for 2016 and 2017 respectively.
EC World REIT is a China-focused logistics trust. Other trusts and companies in Singapore’s stock market that are exposed to China as well as focused on the logistics industry are are Hutchison Port Holdings Trust (SGX: NS8U), Mapletree Logistics Trust (SGX: M44U), and Global Logistics Properties Ltd (SGX: MC0).
Investors might want to compare EC World REIT with these trusts and companies when analyzing the REIT.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim owns units in Mapletree Logistics Trust.