Champion REIT’s Langham Place Mall Saw Record $15M Turnover Rent in 2017

Champion REIT, the Hong Kong-listed trust sponsored by developer Great Eagle, saw record turnover rent of HK$116 million ($14.8 million) in its Langham Place Mall last year, said Ada Wong, the trust’s CEO at a media briefing on its annual earnings Wednesday.

In 2017, the REIT achieved a record distributable income of HK$1.49 billion ($190 million), on the back of healthy income growth across its office and retail properties, which also include the Langham Place Office Tower and Three Garden Road. Distribution per unit rose 5.8 percent over the previous year.

Langham Place Mall in the Mong Kok area of western Kowloon remains fully occupied, and rental income grew 4.7 percent to HK$856 million, mainly due to the solid performance of beauty and skincare tenants, which lifted turnover rents.

The introduction of food and beverage stores such as Yifang Taiwan Fruit Tea attracted more visitors to the shopping centre, said Wong. Overall tenants’ sales jumped 5.3 percent, outstripping the 2.2 percent growth of the local retail market. Following the retail uptick, Champion REIT is prudently optimistic on the prospects of the retail industry in 2018, said the chief executive.

Three Garden Road Rents Leap 18.3%

Passing rents at Three Garden Road, Champion REIT’s grade A office complex in the Central business district, surged 18.3 percent year-on-year to HK$92.52 ($11.8) per square foot in 2017. The most recent leasing transaction achieved a price of HK$120 ($15.3) per square foot, according to a statement by the company. Wong said she expects the rental level for new leases to grow by a single-digit percentage in 2018, in line with the market.

The REIT’s trio of properties also includes Langham Place Office Tower, adjacent to Langham Place Mall. Champion REIT said it has not yet received any offers for the 59-storey grade A office tower that it bought in 2008, after putting the HK$8.5 billion ($1.1 billion) property on the market last July. Wong declined to comment on the possibility of adjusting the asking price for the building.

Three-Asset REIT Eyes Mainland Expansion

With Langham Place Office Tower on sale, the REIT is continuously looking for other opportunities to rebalance its portfolio. Wong said the trust is particularly interested in acquiring premium offices in the Pearl River Delta area of south China, given what she sees as the mainland’s promising outlook over the coming 10 to 20 years.

Wong added that the REIT will consider buying as long as the assets are yield accretive (increasing the trust’s earnings per share), but ruled out the possibility of acquiring properties outside of Greater China due to higher taxes and currency exchange risks. Champion REIT can afford an acquisition deal as large as HK$20 billion ($2.6 billion), she said.

Established and listed in 2006, Champion REIT is sponsored by Hong Kong tycoon Lo Ka Shui’s Great Eagle. The REIT currently holds 2.93 million square feet (272,205 square metres) of prime office and retail floor area across Three Garden Road and the Langham Place complex.