SF REIT has agreed to acquire a warehouse complex in central China for RMB 540 million ($81.2 million), as Hong Kong’s only logistics-focused listed trust seeks to enlarge its three-asset portfolio and expand its geographical footprint.
The property in the Hunan provincial capital of Changsha will add 120,055 square metres (1.3 million square feet) of gross lettable area to SF REIT’s 307,655 square metres of GLA. The complex is 98.9 percent occupied by 21 tenants, the trust’s manager said Monday in a release.
The asset is the first to be acquired from SF REIT’s controlling unitholder, transport and logistics giant SF Holding, following the trust’s listing in May 2021 and joins the portfolio’s existing properties in Hong Kong, Foshan and Wuhu. The acquisition, subject to unitholders’ approval at a general meeting on 22 June, is expected to be completed this month.
“Upon completion, SF REIT will be able to achieve better economies of scale resulting from enhanced operating synergies, both in terms of satisfying tenants’ requirements as well as sharing of asset management resources,” said Hubert Chak, executive director and CEO of the manager.
Adding a Hunan Hub
Completed in 2021, the Changsha property comprises a ramp-up two-storey distribution centre, a three-storey warehouse with two underground levels, two single-storey warehouses, a nine-storey office building and three ancillary buildings.
The agreed value of RMB 540 million represents a 1.9 percent discount to the appraised value of RMB 550.4 million and offers an annualised net property yield of 6.6 percent, the trust’s manager said. The addition of the property will enlarge the total value of SF REIT’s portfolio by 10.3 percent.
SF REIT’s existing assets are the Asia Logistics Hub SF Centre on Tsing Yi island in the New Territories with 160,322 square metres of GLA, Foshan Guicheng Fengtai Industrial Park in Guangdong province (84,951 square metres) and Wuhu Fengtai Industrial Park in Anhui province (62,382 square metres).
The portfolio had a 95.8 percent occupancy rate, an annualised yield of 7.9 percent and a weighted average lease expiry of 4.1 years at the end of 2021.
“Going forward, we will continue to pursue yield-accretive acquisition opportunities of modern logistics properties that are strategically located at transportation hubs, provide good built-in infrastructures for the logistics sector and command high occupancy rates with SFH as an anchor tenant to secure stable returns,” Chak said. “We will work closely with SFH to explore opportunities to further expand SF REIT’s asset portfolio at an accelerated pace.”
Mainland Sheds Beckon
Shenzhen-based SF Holding owns 35 percent of SF REIT’s HKEX-listed units, which are down 36 percent in price since trading began in May 2021 but rallied 2 percent in Monday’s session.
The manager said the trust’s distribution per unit would have increased by 8.5 percent on a pro forma basis if the Changsha acquisition had been completed at the time of SF REIT’s creation on 29 April 2021.
SF REIT’s appetite for mainland sheds mirrors that of Asia’s largest listed trust, Link REIT, which has inked deals in recent months to add the first logistics properties to its retail-heavy portfolio.
HKEX-listed Link REIT in May agreed to purchase a portfolio of three warehouses in the Yangtze River Delta for RMB 947 million ($139.3 million), following its purchase last year of 75 percent stakes in a pair of Guangdong distribution centres for a total of RMB 754 million.