Link Asset Management Limited, (Link) the manager of Link Real Estate Investment Trust, (Link REIT, stock code: 823) announced today (Wednesday) that it has agreed to acquire 100% interest in two institutional grade car park/ car service centres and godown buildings in Chai Wan and Hung Hom at a total consideration of $5,820 million, which represents a discount of approximately 4.3% to the total appraised property value of $6,081 million as at 22 October 2021.
George Hongchoy, Chief Executive Officer, said:
“Our team has been relentlessly exploring suitable investment opportunities in Hong Kong and we are pleased to have concluded the acquisition of the assets, which are strategically located in the urban areas in the city. Occupied by an established tenant, we are confident that the acquisition will bring us stable income with regular rental step-up. While retail remains our key focus, we are gradually adding other asset classes with growth potential to improve our portfolio mix and strengthen our portfolio resilience and productivity.”
The property in Chai Wan is a nine-storey godown building with panoramic sea view and a gross floor area (GFA) of approximately 438,351 square feet (sf) which has been repurposed to a 4S (1) full-service building hosting an automotive showroom, car servicing and repair workshops, godowns and ancillary offices, as well as a car park with 45 parking spaces. On the other hand, the property in Hung Hom is a 13-storey mixed-use car park building with a GFA of approximately 421,401 sf which has also been repurposed to a 4S full-service building hosting an automotive showroom, car servicing and repair workshops, as well as a car park with 932 private and public parking spaces. While the Chai Wan asset offers customers a unique experience, the Hung Hom building is conveniently located within three minutes’ walk from the Whampoa MTR station.
Upon completion of the Sale and Purchase Agreements, Link will enter into the tenancy agreements and re-leasing arrangement with Zung Fu Company Limited, a well-established and reputable car dealer of Mercedes-Benz in Hong Kong, for an initial fixed term of five years and three three-year optional terms thereafter for each property. The master-leases will generate a stable stream of cashflows, with an annual rental increment of 4% structured within each term of the leases.
Link will fully fund the acquisition through its own cash resources and debt facilities. Upon completion, Link’s ratio of debt to total assets will change from 21.6% (2) to 23.6%, based on its consolidated financial position as at 30 September 2021.
The transaction is expected to complete by 31 December 2021.
More details of the properties are available in the regulatory announcement and presentation.
High-resolution pictures can be downloaded here.
- 4S refers to sales, service, spare parts supply and surveys (customer feedback) in connection with a motor vehicle dealership.
- After adjusting for the impact of the interim distribution declared on 10 November 2021, the acquisition of 75% interests in two recently-developed modern logistics assets in Guangdong Province (completed on 27 October 2021), and the acquisition of 50% interests in Sydney central business district retail portfolio (announced on 7 November 2021).
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Link Real Estate Investment Trust (Hong Kong stock code: 823), managed by Link Asset Management Limited, is a leading retail-focused REIT in the world. Listed in 2005 as the first REIT in Hong Kong, Link has been 100% held by public and institutional investors and is a Hang Seng Index constituent stock. From its home in Hong Kong, Link manages a diversified portfolio including retail facilities, car parks and offices spanning Hong Kong, Beijing, Guangzhou, Shanghai, Shenzhen, London and Sydney. Link seeks to extend its portfolio growth trajectory and grasp expansion opportunities in different markets in pursuit of our medium-term target Vision 2025. For details, please visit https://www.linkreit.com/.