Link Asset Management Limited, the manager of Link Real Estate Investment Trust, recently revealed its acquisition of CENTRALWALK, a shopping mall at the heart of Shenzhen’s Central Business District, for RMB $6.6 billion, which equates to nearly $1 billion U.S. dollars.
The transaction marks Link REIT’s first acquisition in Shenzhen, the second in Guangdong-Hong Kong-Macao Greater Bay Area and the fifth in Mainland China, which are all in tier-one cities.
Link REIT will acquire from an independent private investor 100% stake in CENTRALWALK and intends to hold it for long-term investment. The property is a five-story retail center in Shenzhen’s Futian District, which is home to the South China head offices of Fortune 500 companies, multinational corporations, and leading domestic companies.
CENTRALWALK enjoys excellent intra-city and inter-city connections as it is easily accessible from Futian China Railway High-speed station and sits atop two subway lines – namely Line 1, which boasts the highest ridership, and Line 4, which is operated by MTRC. It takes only 14 minutes to reach Hong Kong and less than an hour to most parts of the Pearl River Delta region via CRH. Located in a high-income and high-density commercial area which comprises nearly 40 prime office towers and hotels, CENTRALWALK is well-placed to serve the district’s growing residential and working population.
“The acquisition marks another milestone in our expansion in China,” George Hongchoy, Chief Executive Officer of Link Asset Management Limited, said. “CENTRALWALK is seated in the heart of the city’s booming commercial hub. It is strategically located at the juncture of two popular subway lines in Shenzhen and within a five-minute walk from the Futian high-speed rail station. We see enormous upside potential in this asset as we will apply our expertise in asset enhancement and placemaking to attract footfall to this mall, unleashing its potential as a leisure and entertainment landmark in Shenzhen.”
Upon the completion of the transaction in March 2019, Link REIT will have approximately five million square feet of retail and office space in four tier-one cities on the Mainland: Beijing, Shanghai, Guangzhou, and Shenzhen, with Mainland Chinese assets representing about 13.1% of Link’s total asset value.
“The acquisition will enable us to capture the exponential growth spurred by the high-speed rail link and the Greater Bay Area development,” Hongchoy added. “With diversification of markets, we continue to play to our strengths to offer investors steady income and long-term growth opportunities.”
CENTRALWALK has a retail floor area of about 903,100 square feet and its retail occupancy currently stands at around 100%. It has a gross monthly passing income of RMB 23.8 million as at December 2018. The Property houses a wide variety of familiar brands and has a dynamic mix of retailers, covering food and beverage, fashion, accessories, education, lifestyle, health and beauty, supermarket and a cinema.
Retail tenancies that will expire in 2019, 2020 and 2021 represent approximately 25.5%, 24.8%, and 18.0% respectively of the rental income of the Property. This will give Link REIT the opportunity to enhance the Property’s rental reversion and performance through trade-mix and tenant-mix upgrade.
The acquisition will be funded by internal cash resources and/or existing debt facilities.