Champion to replace the tenant portfolio to maintain growth, Garden Road No. 3, rented a hundred yuan, Qizhong District

Champion to replace the tenant portfolio to maintain growth, Garden Road No. 3, rented a hundred yuan, Qizhong District

Champion REIT (02778) increased its distribution per unit by 8% last year. The net income of its Garden Road No. 3 office building and Langham Place shopping mall increased by 14.2% and 10.5% respectively.

Wang Jiaqi, CEO of Guanjun, said in an interview that more than 40% of Garden Road No. 3 this year has to renew or review rents. The rent is similar to that of the same district office in Central District. I believe that this year’s rent will definitely exceed 100 yuan. As for the retail prospects this year is difficult to predict, it will maintain sales growth by continuously adding new elements and replacing tenant mixes.

After the announcement of last year’s results, many of the big banks are optimistic about their performance. It is expected that the business of Garden Road No. 3 will continue to be stable this year, and Langham Place will continue to grow in the retail market. The stock’s share price has risen in recent months. It has risen 7.7% since its announcement on February 21, and has risen 22.6% since the beginning of the year. It is still a 42.5% discount to the net asset value of each unit. The discount is higher than the market average.

Medical beauty industry has strong rentability

Guanjun has 52% of rental income from Garden Road No. 3. Although the sporadic new lease rentals touched 140 yuan per square meter, as of the end of last year, the overall rent received was only 98.61 yuan, which continued to be lower than the rental level of nearby office buildings.

Wang Jiaqi revealed that more than 40% of Garden Road No. 3 has to renew or review rents this year. I believe that this year’s rent will definitely exceed 100 yuan. She emphasizes bank and asset management company tenants (accounting for Garden Road No. 3 tenants 69) %) Demand for office space in Central is still strong, and new supply in the region will only be completed in a few years. In addition, the launch of A-share futures will attract Chinese financial institutions to set up offices in Hong Kong. The demand for office space in Central is still good.

On the retail front, Mr Wong pointed out that the performance of the Langham Place shopping mall last year was “good enough to be beyond imagination". However, the unclear trend of the renminbi and the high base effect. This year’s retail prospects are “clear" and will continue to add new elements and replace tenants. Combine to maintain sales growth and slightly increase promotional expenses.

China and the UK are still waiting for the opportunity

As for the Langham Place office building in July 2017, there has been no buyer to accept the sale. She pointed out that the transaction is still open at any time, but it is difficult to complete the transaction of the silver code under the current market conditions; the rent level of the site is good, but There is also a need to convert tenants, and the medical and beauty industry is stable and has better rental.

The company has repeatedly proposed to buy in the first-tier cities in the Mainland and the United Kingdom, but it has not yet been seized. Wang Jiaqi said that the acquisition must help to improve the distribution level. It will only look for projects close to the existing property quality, but it is not necessary to buy for the purchase. Now, I am waiting for the opportunity and I don’t want to get a fire stick in the high market in the mainland. The British side may wish to wait for the development of Brexit to stabilize and then consider it.

Talking about the share price of Guanjun is more than 40% discount to the net asset value of each fund unit, but the dividend yield is only about 4%. Wang Jiaqi stressed that at the current price of 10,000 yuan per hand, it can invest in Grade A office buildings in Central and have stable returns. Moreover, compared with the average discount of 35% of the shares of the other four core shopping mall owners, Guanjun is “good to buy”; the dividend yield of about 4% is higher than the average of 3.1% of the industry.