Tycoon Li Ka-shing is known for his constant drive for better efficiency and profitability. Fortune REIT (00778.HK), although only a tiny part of Li’s business empire, lives up to that reputation.
For a landlord, making every square foot of space productive is basic but that is not enough. In an asset-intensive business — properties are expensive to begin with — saving on interest cost is important. Fortune’s recent refinancing exercise demonstrates that point.
By taking out a new five-year loan, the company will be paying lower interest charges on HK$1.4 billion of borrowing. The savings work out to about HK$8 million a year, certainly not enough to be a game changer, but investors will be happy to see how Fortune REIT always strives to run a tight ship, regardless of whether it’s on rough or smooth waters.
Li is also renowned for his insight and ability to anticipate adverse conditions. With the United States sending out tapering signals, money could become tighter over time.
Fortune REIT’s move reflects such concerns. The company stands to benefit from improved borrowing terms even as market liquidity becomes less certain.
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