Link REIT to Acquire Three Yangtze River Delta Sheds for $139M

Link REIT has agreed to purchase a portfolio of three warehouses in the Yangtze River Delta for RMB 947 million ($139.3 million), as Asia Pacific’s largest listed trust returns to mainland China for its second-ever logistics acquisition.

The set consists of one high-quality modern shed in Jiaxing, a city in Zhejiang province just south of Shanghai, and two in Changshu, a manufacturing hub just north of Suzhou in Jiangsu province, Link REIT’s manager said Thursday in a release. The trust will acquire a 100 percent interest in the portfolio, following its purchase of 75 percent stakes in a pair of Guangdong distribution centres last year.

The three target assets span a gross floor area of 192,144 square metres (over 2 million square feet) with a total lettable area of 188,605 square metres. The seller, Shanghai-listed Fujian Dongbai Group, will continue as the operations manager of the properties after the deal’s completion, which is expected to take place in July.

“The limited supply of world-class modern warehouses at prime locations presents attractive upside potential with the continued rise of e-commerce and demand for modern logistics services,” said George Hongchoy, chief executive of Link REIT’s manager. “Together with the logistics assets we acquired last October in the Greater Bay Area, we are set to capture the robust growth momentum of this budding industry.”

Serving Shanghai

Hongchoy said the portfolio acquisition would give the Hong Kong-listed trust a footprint in a highly sought-after logistics market serving Greater Shanghai. The assets in Jiaxing — a connecting hub of Shanghai, Hangzhou and Suzhou — and Changshu South, about 100 kilometres (62 miles) northwest of Shanghai’s city centre, are in operation and fully leased to 3PL, e-commerce and manufacturing firms.

The double-storey Jiaxing asset, built in 2019, has 99,323 square metres of gross floor area, a weighted average lease expiry of 1.8 years and a remaining land tenure of 45 years. The single-storey Changshu South, completed last year, has 23,776 square metres of GFA, a five-year WALE and 33 years remaining on its land tenure.

The Changshu North asset is scheduled to finish construction this month, with Link reporting positive pre-leasing progress. The double-storey, 69,045 square metre facility has 34 years left on its land tenure.

“With excellent connectivity in the Greater Shanghai area through artery expressways, both Jiaxing and Changshu are satellite cities of Shanghai, within its 1.5 hour economic circle and strategically located to serve surging demand from third-party logistics, e-commerce and the consumer product sector as regional distribution centres,” the trust’s manager said.

Portfolio Diversifies

Link REIT’s consideration of RMB 947 million works out to RMB 4,929 ($726) per square metre of gross floor area for the Yangtze River Delta assets. The acquisition price is based on an agreed property value of RMB 1.106 billion, which includes liabilities and represents a 2 percent discount to the appraised property value of RMB 1.128 billion.

Before the latest deal, the most recent additions to the retail-heavy trust’s HK$221 billion ($28.2 billion) portfolio were the 75 percent stakes in the Guangdong sheds in Dongguan and Foshan, acquired for a total of RMB 754 million, and a pair of car facilities in Hong Kong purchased for a combined HK$5.82 billion.

In February, Link announced plans to invest A$596 million ($428.2 million) for a 49.9 percent stake in Oxford Properties’ portfolio of office assets in Sydney and Melbourne. The news came just over two months after the trust agreed to pay A$532.8 million to buy a set of three Sydney retail properties from the real estate division of Singapore sovereign fund GIC. Both transactions are expected to be completed within the first half of this year.