China’s Powerlong Real Estate Holdings Ltd has proposed a spin-off of its units of Powerlong REIT, post which it is expected to own less than 50% of the Powerlong REIT units.  After the proposed spin-off, Powerlong REIT will conduct a global offering of its units including a public and an international offering. According to the company, the proposed spin-off is expected to create greater value to the company and the shareholders. After the spin-off, the day-to-day property management functions for the REIT Properties – certain shopping malls owned by the group that will be injected to the Powerlong REIT Group – will be delegated to the Powerlong CM Group which will result in synergies among the group companies. The proceeds received by the Company will provide the Retained Group (the company and its subsidiaries excluding Powerlong REIT Group and Powerlong CM Group) with funds for its operations and reduce its net borrowings. It will also help in capitalising a part of the REIT Properties in the form of upfront cash proceeds. Powerlong REIT Group will also be able to tap the international markets as a separate listed entity post the spin-off. The spin-off, however, is subject to approval by the Securities and Futures Commission of Hong Kong (SFC). The company said, “The key objectives of Powerlong REIT is to provide its unitholders with stable distributions and the potential for sustainable long-term growth in the distributions and enhancement in the value of the commercial and retail properties by owning and investing in high quality recurrent rental income generating from commercial and retail properties in the PRC. Powerlong REIT will not engage in the property development business upon completion of the Proposed Spin-off.”

Powerlong’s 3.9% 2022s and 5.95% 2025s were up 0.13 and 0.18 to trade at 99.63 and 102.38 respectively.

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