An existing Fortune REIT property in Hong KongFortune REIT has indicated that it will use proceeds from the sale of Nob Hill Square to repay existing loans.

Hong-Kong-focused commercial and retail property landlord Fortune REIT (SGX: F25U) has completed the acquisition of Kingswood Ginza on the 9 October. With the addition of the new property, Fortune REIT now manages a total of 18 retail and office properties under its portfolio.

Fortune REIT now holds a portfolio of 18 properties in Hong Kong

Kingswood Ginza is the largest shopping centre in the Yuen Long district which enjoys a high occupancy rate of 95.5 per cent and a diversified mix of 200 tenants. The acquisition has been done by the REIT to capture the increasing human traffic from Chinese mainland visitors and a growing demand from an expanding population in Hong Kong’s Northwest New Territories. The acquisition is expected to be yield accretive.

The REIT conducted a placement exercise to assist in footing the HK$5.8 billion needed to fund the acquisition. The exercise yielded 142,962,000 new units in Fortune REIT at an issue price of HK$6.82 each, raising approximately HK$975 million.

Fortune REIT has disclosed that approximately HK$947 million, which is equivalent to 97.1 per cent of the proceeds from the placement, has been used to partially fund the acquisition of the property with the remaining used to pay various related fees and expenses.

Besides the placement of new units, a further HK$5,025 million was also obtained via a drawdown of its existing credit facilities.

Units of Fortune REIT are currently trading up about 1.3% at about HK$6.30 on the Singapore Exchange.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.