New World Development (0017) said on Monday that it has received the notice of acceptance from the Shanghai Stock Exchange (SSE) on the proposed spin-off and separate listing of the NWD C-REIT on the SSE, with an expected offering size of 3.82 billion yuan (HK$4.48 billion).
NWD will subscribe for at least a 20 percent interest in the NWD C-REIT, while the remaining will be subscribed by strategic investors, institutions investors and retail investors.
Upon subscription, the developer estimated that it will receive net proceeds from the proposed spin-off of around 3.24 billion yuan, which will be used for loan repayment and general corporate purposes.
The real estate investment trust fund comprises Shanghai K11 Art Mall and Shanghai K11 ATELIER NWT as underlying assets.
Following the completion of the spin-off, NWD will remain the operation manager of these assets to provide operation management, property management and related management services, and it will continue to be marketed under the group's "K11" brand.
"The NWD C-REIT will be the first among Hong Kong enterprises," said Echo Huang Shaomei, executive director and chief executive of NWD, adding that the establishment of NWD C-REIT demonstrates the strong brand equity of NWD and K11 in the Chinese mainland market and marks an important milestone in advancing the group's asset management and capital deployment capabilities.
The move will also give NWD access to new forms of capital from institutional and retail investors in the region, while enabling the group to unlock asset value and redirect resources to support future growth through other projects, Huang noted.
Furthermore, the NWD C-REIT will become a capital instrument with stable returns in the form of unit distributions, whilst the group continues to benefit from the business prospects and results of the Asset through asset-light model, she added.
NWD said it has received an irrevocable undertaking from its controlling shareholder, Chow Tai Fook Enterprises. Accordingly, in the event that an extraordinary general meeting is convened by the group to approve the spin-off, its controlling shareholder will vote in favour of any relevant resolutions.
