Garden Road property crown champion reluctant sellers

Champion REIT (02778) announced 2017 annual results. The annual rental income rose 5.7% YoY to RMB 2.43bn with distributable revenue up 5.6% YoY to RMB 1.487bn with a distribution of 12.55 at the end of each unit Cents, bringing the total number of units to 24.26 cents per unit for the year, up 5.8% from a year earlier. Rental income of its three properties recorded a year-on-year increase. Chief Executive Wong Kar-kai said that among them, the intention of Chinese-funded enterprises entering the commercial buildings in Hong Kong after the 19th National Congress was to increase so that the substantial rent increase was recorded at No. 3 Garden Road. The average salable rent increased 18% to $ 92.52 on average, while the latest salable rent Rose to 120 yuan. She said only 10.5% of Garden Road Road will be renewed for only 10.5% of the total area this year. However, due to the low vacancy rate of commercial buildings in Central and the expected renewal of tenancy opportunities for the tenants, it is estimated that rent will increase in 2018.

Tai Wan District to find the acquisition

In the middle of last year, Champion sought to sell Langham Place office building. Mr Wong said no letters of intent have been received so far. She did not respond to the question of whether the bids should be adjusted. However, she said she is open-minded when choosing buyers and said: “As long as anyone wants Will be considered for buying. “For the successful sale of the Central District Center in the same district, she said that unless the offer was very attractive, the sale would not consider selling Garden Road No. 3, saying” there is a rare area in Central District where selling is hard to come by. ”

Wang Jiaqi revealed that the Trust is looking for acquisition opportunities because it is expected that China will be the market with the most growth potential in the future. With the current target of office buildings in first-tier cities within the Tai Wan area, the rate of return will need to exceed 4%. As Hong Kong assets are high, Difficulties in finding high-return projects in Hong Kong and temporary unintentional acquisition of overseas properties due to foreign exchange risk and high taxation expenses. She also pointed out that the sale of Langham Place does not affect the new acquisition of trusts. The Trust can have sufficient cash on hand and can also borrow about 20 billion yuan in debt financing.

Benefit The recovery of the retail market in the second half of 2017 led to a 35% increase in the share of Langham Place Mall. The increase in the number of arrivals in Hong Kong was mainly driven by businesses such as beauty and restaurants, She is also optimistic about the retail market in 2018. In addition, she said raising interest rates this year could have an impact on the distributable income of the trust. As the United States raised interest rates by 25 pips, the trust’s distributable income will be reduced by 1%. The trust has now increased its fixed-rate loan ratio from five to five As a result, there is no need for further refinancing for the time being. However, we do not rule out the possibility of raising the interest-rate-fixed loan ratio this year.