MAINBOARD-LISTED Fortune Reit has signed a framework agreement to acquire Kingswood Ginza Property in Hong Kong for HK$5.85 billion (S$959 million).
The acquisition is expected to be yield-accretive and provides strong growth potential through asset enhancement initiatives.
Located in Tin Shui Wai, New Territories, the largest new town in Hong Kong, Kingswood Ginza Property is the largest shopping centre in the Yuen Long district.
The property serves a catchment population of close to 288,000 residents, hotel residents of the 1,102-rooms Harbour Plaza Resort City, as well as many visitors from mainland China due to its close proximity to the mainland border.
Kingswood Ginza, which has a high occupancy of 95.5 per cent and a diversified tenant base of more than 200 tenants, is expected to provide Fortune Reit with a stable cash flow from its income.
It also increases the reit's gross rentable area from the current 2.45 million square feet by 665,244 sq ft.
The reit manager expects to finance the acquisition by drawing down about HK$5.09 billion from new bank facilities and utilising net proceeds of some HK$764 million from a proposed unit placement.
Following the drawdown of the new facilities, the reit's gearing ratio will increase to about 34.5 per cent - within the borrowing limits under the Singapore property funds appendix and the Hong Kong Reit code.