Singapore Reit hopes to reopen damaged Festival Walk mall in Hong Kong in early 2020

The Festival Walk mall has been closed since Nov 13, 2019, after suffering extensive damage in the protests.
The Festival Walk mall has been closed since Nov 13, 2019, after suffering extensive damage in the protests.PHOTOS: REUTERS

SINGAPORE (THE BUSINESS TIMES)- Mapletree North Asia Commercial Trust said it hopes to soon reopen the Festival Walk mall in Hong Kong that was damaged during widespread protests.

The trust's manager said on Wednesday (Dec 4) that the centre will open either partially or fully in the first quarter of next year. The reopening is also subject to certain official approval.

The Festival Walk mall has been closed since Nov 13 after suffering extensive damage in the protests.

The loss of retail and office revenue from the damage is expected to significantly hit distribution per unit (DPU) for the six-month period to March 31, 2020.

The manager said it will implement a top-up to the distributable income for the third and fourth quarter this year and the first quarter of the 2020-2021 financial year.

The top-up is to enable a certain level of distributable income to be made until such time the loss of revenue is recovered through insurance claims, said the manager.

The amount, based on approximately 40 per cent of the Festival Walk retail revenue, will be funded by external borrowings.

Meanwhile, the manager announced on Wednesday that it is acquiring 98.47 per cent of two freehold office blocks in Greater Tokyo for $482.5 million from Mapletree Investments.

The acquisition cost includes fees and expenses of about $4.8 million.

 
 
 

The proposed acquisitions have a net property income yield of 4.5 per cent. They have a gross floor area of 180,941 sq m altogether and a net lettable area of 91,583 sq m and an occupancy rate of around 85.9 per cent with 53 tenants altogether.

Ms Cindy Chow, chief executive of the manager, said the proposed acquisition of the towers will contribute to the diversification of the trust and reduce the income and asset concentration of Festival Walk.

Ms Chow noted that the properties in Japan are freehold and provide a "relatively higher yield spread against the local cost of funds" compared to the Greater China market.

They also have convenient access to public transport nodes with a "strong tenant base from a diverse trade mix", she added. They include information technology, financial and real estate sectors.

The property value of the portfolio after the deal will stand at about $8.2 billion, up 6.3 per cent from the existing portfolio of $7.7 billion.

The manager intends to finance the acquisition with issuance of units to the sponsor's nominee, a wholly-owned unit of Mapletree Investments, debt financing and internal cash resources.