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A blog about investments, financial news, stocks, unit trusts, REITs, bank deposit rates and great investors who live in Singapore like Jim Rogers. Nothing herein constitutes or should be construed to constitute any (i) offer, advice, invitation or solicitation from me to buy or sell any investments, securities or other financial products, (ii) invitation or inducement to engage in investment activities or financial promotions of any kind or (iii) investment advice or recommendation.
Sunday, January 1, 2012
Fortune REIT intends to buy 2 Hong Kong properties for HK$1.9bil
Fortune REIT is looking to acquire two retail properties in Hong Kong for a total consideration of HK$1.9bil (S$319mil) that will bring its gross rentable area up by 23 per cent. Belvedere Garden Property comes with a price tag of HK$1.25bil, while Provident Centre Property costs HK$650mil. They will increase the gross rentable area of Fortune Reit's retail portolio by some 23% to 2.4mil sq.
The total consideration to be paid of HK$1.9bil is below the respective valuations (as at Sept 30, 2011) of HK$1.98bil and HK$2.02bil by independent valuers Knight Frank and Savills. It expects the purchases to be yield‐accretive.
Fortune will have to pay HK$49mil in fees and expenses for the acquisitions, raising the total cost of the acquisition to HK$1.949bil. It does not have plans to raise new equity ‐ it will fund the HK$1.9bil using both debt and internal funds. Its aggregate leverage, at 20.1% as at Sept 30, is expected to go up to around 26.3% immediately after the transactions.
Fortune REIT believes that the deals will be yield accretive. The two properties generated a net property income yield of 4.2% for the year ended Dec 31, 2010 ‐ higher than the yield of 3.9% from its existing 14 properties.
It estimated that if it had owned the properties since Jan 1 this year, its distribution per unit for the six months ended June 30 would have been 6.7% higher, at 13.66 HK cents.Fortune REITs units closed at HK$3.77 after the news was released.
Labels:
Fortune REIT,
Singapore REITS
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