MAPLETREE Greater China Commercial Trust is buying a business park project in China - its first acquisition since listing on the local bourse in 2013.
The real estate investment trust's manager said yesterday it is shelling out about $402 million for Sandhill Plaza in Shanghai.
Ms Cindy Chow, the manager's chief executive, said Sandhill Plaza is "a premium quality business park" development in Zhangjiang Hi-tech Park in Shanghai, which is part of the city's free trade zone and commonly known as Shanghai's Silicon Valley.
She noted that it has a high occupancy rate, strong tenancy profile and an attractive rental growth opportunity within a strong rental market.
"The acquisition of Sandhill Plaza is in line with the trust's strategy to invest in best-in-class real estate assets for commercial purposes in the Greater China region," she added.
Sandhill Plaza, a business park project in Shanghai, is being acquired by Mapletree Greater China Commercial Trust. The development has a gross floor area of about 83,800 sq m and includes a 20-storey tower and seven blocks of three-storey buildings. -- PHOTO: COLLIERS INTERNATIONAL, MGCCTM
Sandhill Plaza has a gross floor area of about 83,800 sq m and includes a 20-storey tower and seven blocks of three-storey buildings.
Most of the 58 tenants are from the high-tech, information technology, and research and development sectors, and include entertainment giant Disney.
Sandhill Plaza had a committed occupancy rate of 96.2 per cent as at March 31.
The trust added that the property will be a "strategic addition" to its portfolio as it will grow the trust's footprint to Shanghai, a "first-tier commercial hub".
Once the acquisition is complete, the trust's total assets will increase 7.8 per cent to about $5.9 billion, while its lettable area will rise by 37 per cent to 2.6 million sq ft.
The trust plans to fund the purchase fully, which is expected to be completed by this week, with debt.
Credit ratings provider Moody's Investors Service said in a statement yesterday that the "proposed acquisition of Sandhill Plaza in Shanghai will enhance portfolio diversification and reduce revenue concentration from its asset in Hong Kong".
The trust's portfolio includes Festival Walk, a mall in Hong Kong, and an office building in Beijing.
Ms Jacintha Poh, an assistant vice-president and analyst at Moody's, said: "The Shanghai acquisition will add a third income-generating asset to the trust's portfolio, thereby reducing its reliance on its largest property, Festival Walk."
Moody's noted that once the acquisition is complete, Festival Walk will comprise 71 per cent of the portfolio's investment property value, down from 76 per cent now.
Moody's expects the gross rental income contribution from Festival Walk to fall below 70 per cent after the acquisition, from 76 per cent as at March 31.
Ms Poh added: "The trust will also benefit from greater geographical diversification within China."