China Outlet Mall Developer Sasseur Plans $453M Singapore REIT IPO

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Sassuer chairman Xu Rongcan is preparing to list an outlet mall REIT in Singapore

Chinese retail developer and operator Sasseur Group, which is backed by Ping An Real Estate and Warburg Pincus, plans to cash in on its collection of four mainland outlet malls by listing a real estate investment trust on the Singapore Exchange in March, according to an account in The Business Times.

The initial public offering for the REIT could raise between S$500 and S$600 million ($377 to $453 million), and the vehicle would have a market cap of S$1 billion ($754 million) after its debut, the newspaper reported. The trust, which would be the first Singapore-listed outlet mall REIT, is poised to generate an indicative yield of seven percent this year and mid-seven percent in 2019, according to the published report.

Shanghai-based Sasseur Group is currently sounding out investors in the planned listing, after postponing plans to launch the REIT late last year in the hope of attracting stronger interest in the offering.

Mainland Outlet Mall Operator Plans Singapore Debut

The IPO portfolio will comprise four mainland outlet malls with a combined value of about S$1.5 billion ($1.1 billion), according to media reports. Two of the malls are located in the southwestern metropolis of Chongqing, a third in Kunming — the capital of Yunnan province — and the fourth outlet is in Hefei, the capital of eastern China’s Anhui province. The trust’s IPO prospectus is set to be registered on March 1, ahead of an expected March 29 listing.

Sasseur Group opened its first shopping centre in Chongqing in 2008, and has since built a portfolio of nine outlet malls in second-tier cities including Chongqing, Hangzhou, Hefei, Xi’an, Changchun, Guiyang, Nanjing and Kunming. Eight of the retail hubs already have reached at least 90 percent occupancy, according to Sasseur’s corporate website.

Discount Luxury Continues to Win Over Investors

Sasseur Hefei mall

Sasseur opened its Hefei outlet in 2016

US private equity giant Warburg Pincus and Ping An Real Estate, the property investment arm of China’s Ping An Insurance, are among the backers of the REIT sponsor Sasseur Cayman Holding.

L Capital Asia, a Singapore-based fund manager backed by LVMH Moët Hennessy Louis Vuitton SA, invested more than $100 million in Sasseur Cayman Holding in January 2015. Warburg Pincus also participated in the fundraising round, committing an undisclosed amount, after making an initial investment in 2011.

Sasseur competitor Beijing Capital Juda estimated last July that the China market can accommodate a total of 200 standard outlet malls, four times the current number. By comparison, the US has nearly 300 outlets in total.

Chinese demand for discounted luxury products motivated German insurance giant Allianz Group to partner with Gaw Capital and TH Real Estate on a planned $2 billion fund targetting high-end outlet malls in China last year.

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