[photopress:gateway.jpg,full,alignright]Gateway Group, a Hong Kong developer, is reported to be reviving a plan to offer the first publicly traded real estate investment trust made up solely of mainland China office buildings.
The trust may raise up to $500 million in a Hong Kong sale as early as the first half. The trust would initially pay investors from income from Beijing’s Gateway Plaza, twin office towers whose multinational tenants include the German car-maker BMW.
Gateway Group is taking advantage of rising demand for top-grade office space as foreign companies expand and upgrade their Beijing offices after China opened its domestic banking market wider to foreign competition in December.
Jason Yang, a senior manager at the Beijing office of Colliers International, which provides commercial real estate services, said, ‘There is an abundant supply of office buildings in Beijing, but not that many grade-A properties. Many tenants in the central business district looking to expand or upgrade their office space are finding it difficult to do so.’
According to a report by Jones Lang LaSalle vacancy rates for grade-A office buildings fell in the fourth quarter last year to 12.9%, down 1.6% from the previous three months. It is unclear what properties Gateway will pursue in the future to add to the real estate trust, and whether they will be in Beijing.
Gateway Group, also known as Bestride Holdings, plans to use the trust to buy and develop property in China. Deutsche Bank and HSBC Holdings will arrange the initial public offering, the people said, with the German bank also serving as the trust’s manager.
Gateway began investing on the mainland with hotels and other property developments in the southern province of Hunan. Gateway Plaza comprises two 25-story office towers, according to its Web site, and was completed in September 2005. Most of its units have been leased out to firms including Fuji Xerox, Sony and Zürich Insurance, according to the Web sites of the companies.
Gateway Group scrapped an earlier plan to offer a $255.9 million, real estate trust in the first quarter last year, the Hong Kong English-language newspaper the Standard reported last March. A number of issues contributed the proposal’s demise, the paper reported.