Carlyle first invested in New Century Group in 2007, buying a 40 percent stake for $100 million with capital reportedly from its Carlyle Asia Partners II, a $1.8 billion, 2005-vintage fund.
New Century Real Estate Investment Trust would be the first China-based hotel REIT, comprising four, five-star hotels and one, four-star hotel in Tier II cities in China, according to a New Century statement. The REIT has the option to acquire two other hotels owned by New Century Group.
The five hotels offered in the REIT have a total of 2,021 rooms and comprise approximately 3.5 million square feet of gross floor area. They are subject to a management contract and lease to New Century Hotel Management for the next 10 years. Investors in the REIT can expect a distribution of 7.6 percent to 9.2 percent for 2013, it noted.
If successful, the Carlyle-backed IPO would become the first REIT to list on the Hong Kong stock exchange since 2011, when China-focused Hui Xian REIT, backed by Hong Kong billionaire Ka-shing Li, raised $1.6 billion, according to the Hong Kong stock exchange.
New Century’s IPO, which launched earlier this week and will conclude on Thursday, is expected to raise up to HK$1.97 billion (€194 million; $254 million), despite what the statement described as poor market conditions. REITs in Hong Kong have taken a particularly hard beating of late, with their stock prices dropping as much as 20 percent since mid-May, according the Hong Kong stock exchange.
“Looking ahead, New Century REIT is well-positioned to capitalise on external growth opportunities as the New Century Group will provide New Century REIT with access to future acquisition opportunities,” Miaolin Chen, chairman and non-executive director of New Century Asset Management, said in the statement.
The IPO has a range of international and Chinese underwriters, including Morgan Stanley Asia, Standard Chartered, Bank of China International and China Construction Bank.
Carlyle declined to comment.