24 Jul 2015

Link REIT acquires Shanghai’s Corporate Avenue 1 & 2 for RMB 6,600.86M

The Link Management Limited, as the manager of The Link Real Estate Investment Trust (“The Link REIT”; Hong Kong stock code: 823), today entered into a sale and purchase agreement to acquire Corporate Avenue 1 & 2 (the “Property”) in Shanghai for RMB 6,600.86 million. This marks The Link REIT’s first acquisition of a mixed-use property (with office and retail components) in Mainland China, following its recent acquisition of Beijing’s EC Mall in April this year.
George Hongchoy, Chief Executive Officer of The Link Management Limited, is delighted to have entered into this agreement with Shui On Land Limited. He commented, “This is our second investment in Mainland China and a major step forward for income and growth diversification. While retail remains our primary business focus, diversifying into other commercial / office properties enables The Link REIT to tap into the different growth cycles of alternative assets, complementing our predominantly retail based income stream and improving the asset quality of the overall portfolio. This acquisition is consistent with the investment policy with an objective of making yield accretive acquisition and growing returns for the Unitholders.”
“Located strategically in Shanghai’s core CBD in Taipingqiao/Xintiandi area in Huangpu District, the Property is a recognised district landmark in Shanghai. It is in close proximity to Shanghai’s retail destination of Huaihai Middle Road. Convenient transport connectivity and a catchment area of affluent business and residential communities, combined with the strong market for premium Grade A office space make this an attractive long-term investment.” He added that the forecasted supply of Grade A office space in the core CBD is limited, therefore adding to the value of the Property.
Mr. Vincent H. S. Lo, Chairman of Shui On Land, said, “With the fine-tuned strategy, we are unlocking and realising the market value of our commercial property portfolio. This increase in asset turnover will strengthen our balance sheet and position the Company for future growth. We are delighted to find a long-term operator with whom we can partner to continue making the Taipingqiao area a leading destination.”
Completed in late 2003, the Property was built with top-notch features and specifications that still maintain their attractiveness even compared to recently completed buildings in the district. It has been a landmark premium Grade A office sought after by multinational companies, professional firms and large domestic enterprises.
The Property is well served by four metro stations on three Shanghai city metro lines. It is located at the heart of the Xintiandi complex. This boosts the extensive supporting facilities from luxury shopping, up-market dining and entertainment and visitors from nearby Taipingqiao lake and leisure park, in addition to its proximity to Huaihai Middle Road. Shoppers and tourists from the Xintiandi area will provide strong footfall support for the Property’s retail business.
The Property has a gross floor area (including the basement) of approximately 98,000 square metres. Corporate Avenue 1 is a 21-floor tower comprising 19 floors of office space. Corporate Avenue 2 is a 10-floor tower comprising 8 floors of office space. Two floors of retail space at the street and first floor levels connect the towers. There are also 226 parking spaces located at the two basement levels.
The occupancy rate of the Property since 2011 has remained above 94%. As of 30 June 2015, occupancy of the retail and office components of the Property was 100% and 98% respectively. Many tenants have been with the Property for over five years with a good historical retention rate. The top 10 tenants are multinationals operating in various industries such as professional services, multimedia, banks and industrial goods. Together, they contribute approximately 67% of the total rental income.
The acquisition will be funded by The Link REIT’s own cash resources and/or debt facilities.
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