Hong Kong’s Link Real Estate Investment Trust (00823.HK, Link REIT) has signed its first acquisition deal in mainland China, snapping up EC Mall for 2.5 billion yuan (US$403,000), the Hong Kong Economic Journal reported Wednesday.
The price is 1.63 percent above the property’s appraised value.
The mall in Beijing’s Zhongguancun district, often referred to as China’s Silicon Valley, is expected to yield 4 percent after taxes.
Such returns are rare in Hong Kong, analysts said.
The deal is expected to close on April 1, allowing Link REIT to book rental income shortly after and potentially driving up its distribution ratio.
The property trumped 93 other shopping malls that were under consideration because of its high visitor traffic and central location.
It had a 99 percent occupancy rate, 94 active leases and 41 use permits at the end of February.
The mall made 13 million yuan during the month, with 8 percent coming from its share of revenue and the rest from rental income. It charges about 300 yuan per square meter a month.
EC Mall’s management team will continue to run the property, the report said,
Link REIT will continue to look for acquisition opportunities in Beijing, Shanghai, Guangzhou and Shenzhen amid increasing urbanization, chief executive George Kwok-lung Hongchoy said.
This article appeared in the Hong Kong Economic Journal on March 25.
Translation by Vey Wong
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