Mapletree Greater China Commercial Trust's Sandhill Plaza (Photo: Colliers International)

China-focused office and retail REIT, Mapletree Greater China Commercial Trust (MGCCT) (SGX:RW0U), announced on 15 June that it will be acquiring a business park property in Shanghai for RMB1.8 billion (SGD412.2 million).

The property, Sandhill Plaza, will be the REIT’s maiden acquisition since it was established in 2013.

Sandhill Plaza is a business park property developed on a land plot of about 23,203 square metres in Zhangjiang Hi-tech Park which is part of Shanghai’s Free Trade Zone. The property is currently occupied by a total of 58 tenants including Broadcom, Disney, and Wincor Nixdorf. As at 31 March 2015, Sandhill Plaza has a committed occupancy rate of 96.2%.

The property, consisting of one 20-storey tower, seven blocks of 3-storey buildings and two basement levels of carpark, has an overall gross floor area of 83,000 square metres. Sandhill Plaza is on a 50-year leasehold which commenced in February 2010.

“The acquisition is expected to be accretive at the distribution level, and to contribute to the stable and steady growth of the MGCCT portfolio”, said the REIT in an official statement on the purchase.

MGCCT has indicated that the acquisition will be fully funded by debt and existing available banking facilities, with a combination of both RMB and HKD denominated debt facilities. The gearing of MGCCT is expected to increase from 36.2% to 40.6%, assuming that the acquisition is completed on 31 March 2015.

Upon completion of the acquisition, MGCCT’s total assets will increase by 7.8% from approximately SGD5,488.1 million as at 31 March 2015, to SGD5,916.2 million, said the REIT. MGCCT’s lettable area will also increase by 37% from 1.9 million square feet to 2.6 million square feet.

Units of MGCCT ended the trading day about 2% lower from its previous close to finish at SGD1.02.

Mapletree Greater China Commercial Trust's Sandhill Plaza (Photo: Colliers International)
Mapletree Greater China Commercial Trust's Sandhill Plaza (Photo: Colliers International)

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.