Link REIT to buy Yangtze River Delta logistics assets for $139m

Link REIT to buy Yangtze River Delta logistics assets for $139m
The logistics asset in Changshu South

Link Real Estate Investment Trust (Link REIT) has agreed to acquire a prime logistics portfolio in the Yangtze River Delta (YRD) for RMB 947 million($139.4 million).

Located in the well-established logistics hubs in the YRD, the portfolio consists of three high-quality modern warehouses in Jiaxing, Zhejiang Province and Changshu, a county-level city under the jurisdiction of Suzhou, Jiangsu province.

According to the REIT, 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 (3PL), e-commerce and the consumer product sector as regional distribution centres.

The three logistics assets cover a total gross floor area of 192,144 square metres with total lettable area of 188,605 square metres.

The assets in Jiaxing and Changshu South are in operation and fully leased to leading 3PL, e-commerce and manufacturing companies in Mainland China.  The Changshu North asset is under the final stage of construction and is expected to complete in May 2022.

The acquisition price is based on the agreed property value of RMB 1,106 million, which represents a discount of 2% to the appraised property value of RMB 1,128 million as at the valuation date.

Link REIT said the acquisition is subject to the approval of the shareholders of the seller group, Fujian Dongbai Group Co. Limited at their general meeting expected to be held in May 2022.

Upon completion of the acquisition, Fujian Dongbai, seller group of the portfolio will remain as the operations manager of these three assets.

Link will fully fund the acquisition through its own cash resources and existing debt facilities. The transaction is expected to complete in July 2022, after the construction of Changshu North asset completes.

“This acquisition of a top-quality logistics portfolio allows us to gain a footprint in a highly sought-after logistics hub in Mainland China and is immediately yield accretive. 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. 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,” said George Hongchoy, Link’s Chief Executive Officer.