EC World REIT property, Hengde Logistics. (Photo: EC World REIT)EC World REIT property, Hengde Logistics. (Photo: EC World REIT)

The local government of Linping District, Hangzhou City, China is expropriating Fu Zhuo Industrial asset from EC World REIT.

The REIT received a formal notice from the government on 6 January with regards to the compulsory expropriation.

The asset will make way for the Grand Canal National Cultural Park in Hangzhou, said the REIT.

Fu Zhuo Industrial is a port property which comprises berths and office buildings and is located in the west of Chongxian New City.

It has a total land area of approximately 24,403 square metres and a total net lettable area of approximately 7,128 square metres with a remaining lease tenure of approximately 34 years.

Based on the latest valuation conducted by Savills Real Estate Valuation, the valuation of Fu Zhuo Industrial was RMB117,000,000, representing 1.45% of the whole portfolio of EC World REIT.

In accordance with the notice, EC World REIT is entitled to receive compensation based on the expropriation valuation of Fu Zhuo Industrial, including the land use right, buildings and equipment.

The target date of vacating the property is 31 March 2022.

EC World REIT has engaged the relevant authorities to discuss the details of the compulsory expropriation, including the details of compensation.

It will provide further updates to unitholders once it has more information.

EC World REIT was last done on the Singapore Exchange at SGD0.75, which presently implies a distribution yield of 8.86% according to data on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.