Investment activity has continued to be active, in particular among institutional investors who have an interest in industrial and car-park assets offering long-term growth potential. Commenting on Link REIT’s recent acquisitions, Nancy Chan of Valuation & Advisory Services shares her insights into the property investment market.
Link REIT acquired two Institutional Grade Car Park/ Car Service Centres from Jardine Matheson Group in Hung Hom and Chai Wan on 11 November for HK$5.82 billion.
Upon announcing the investment, CEO George Hongchoy said in a statement that Link REIT was diversifying its portfolio to strengthen its resilience and productivity. The brace is also expected to bring in a recurring, stable stream of rental returns for the Trust due to a Leaseback Agreement with Jardine.
The first property, Zung Fu Car Park, is located on No. 50 Po Loi Street, Hung Hom, Hong Kong. The 13-storey industrial space with a car park building comprises 932 parking spaces with a ground floor car showroom. The first to fourth floors are repair workshops, floors 5-12 are undercover public parking spaces, and the roof has uncovered parking. The building was bought for HK$3.12 billion.
The other property is Zung Fu House at No. 60 Ka Yip Street, Chai Wan. The nine-storey industrial building comprises 45 parking spaces (including lorry parking), a motor vehicle showroom, and ancillary offices. With a consideration of HK$2.7 billion, the property is another rare example of an institutional grade 4S car centre.
Acquiring industrial buildings to diversify their portfolio is in line with Link REIT’s current investment focus on yield-accretive, income-producing assets with potential long-term growth.
These two transactions show the capital market is recovering, and institutional investors like Link REIT and its counterparts are continuously seeking investment opportunities in industrial and car park sectors. The idea of having investments that generate a stable income is enticing investors back into the market.
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