Link REIT is acquiring a 50% interest in Shanghai Qibao Vanke Plaza in Shanghai for RMB2,772 million.
The consideration is based on the agreed property value of RMB6,400 million, which represents a discount of 2.7% to the appraised property value of RMB6,580 million as at 31 December 2020.
“The acquisition is in line with Link’s investment strategy to invest in yield-accretive and income-producing real estate which has potential for long-term growth. Upon completion, the property will be immediately yielding, with strong growth potential”, said the REIT’s CEO, George Hongchoy.
Shanghai Qibao Vanke Plaza is a 5-storey commercial development with 3-storey basement, providing total gross retail area of approximately 149,000 square metres, and a car park with 1,471 parking spaces.
It serves a suburban residential area, with direct connectivity to Qibao metro station.
With further improvement of surrounding infrastructure, including the Jiamin Line, Airport Connection Line and Qibao Eco-Business Park, the catchment population is expected to expand even more, said Link REIT.
The property’s occupancy was at approximately 97.8% at end-December 2020.
Link REIT will fund the investment with its internal resources and facilities with the intention to partially hedge foreign exchange fluctuations.
Upon completion, Link REIT’s pro-forma adjusted ratio of debt to total assets will rise from 17.9% to 19.2%, based on its consolidated financial position as at 30 September 2020.
The transaction is expected to complete in March 2021.
The REIT’s full presentation on the acquisition can be viewed here.
Link REIT was last done on the HKEx at HKD74.25.