19 Dec 2013
The Link REIT is pleased to announce the signing of the Memorandum of Understanding (the “MOU”) with China Vanke today (19 December 2013). The proposed strategic cooperation will bring together The Link REIT’s experience in commercial real estate investment, operation and management in Hong Kong with China Vanke’s real estate development expertise, experience in the PRC and deep knowledge of the local markets.
With the substantial growth in business activities over the years, The Link REIT continues to seek expansion opportunities actively through various investment options and identifying locations with growth potential and assets with value-add opportunities.
George Hongchoy, Chief Executive Officer of The Link Management Limited (the Manager of The Link REIT) said, “China Vanke is a leading property developer in Mainland China. As we explore ways to expand into the PRC, the intended collaboration presents an opportunity to partner with one of the largest and most reputable property developers in the PRC to identify suitable real estate investment opportunities as part of our long-term strategic plan.”
China Vanke is a leading residential property developer in the PRC, primarily focusing on the development, sale and management of quality residential properties. China Vanke was founded in 1984 and has been listed on the Shenzhen Stock Exchange since 1991. It has a market capitalisation of approximately RMB92.89 billion (approximately USD15.30 billion) as at 17 December 2013. China Vanke was ranked no. 1 in China in 2011 and 2012 in terms of contracted sales according to China Real Estate Appraisal Centre (中國房地產測評中心) and China Real Estate Information Corporation (中國房產信息集團). As at 31 December 2012, China Vanke had 320 property projects in various stages of development throughout approximately 60 major cities in the PRC. It had an aggregate recorded contracted gross floor area (GFA) of over 12.96 million square metres for the year ended 31 December 2012.
Pursuant to the MOU, the Manager and China Vanke will explore the feasibility of various options of strategic cooperation in the PRC, whereby both parties will jointly seek to find suitable investment opportunities in retail properties in the PRC, which ideally, are located in densely populated communities in the PRC with important transportation networks and can provide a one-stop shopping experience to residents in the surrounding catchment area. No specific retail property is identified in the MOU. The strategic cooperation will provide The Link REIT access to a high-quality pipeline of projects in the desirable “new mainstream” market or middle-class segment of the PRC.
Mr Hongchoy added, “We believe that through expansion into the PRC, we could generate synergy and achieve greater value for our stakeholders.” The Link REIT is subject to certain restrictions in geographical location of investment, and approval from unitholders by way of voting in an extraordinary general meeting is required to enable expanding its investment mandate out of Hong Kong which the Manager is considering.
The signing of the MOU presents the strategic cooperation of The Link REIT with China Vanke in the PRC. Currently, there is no discussion on any specific projects. Before obtaining unitholders’ approval to expand The Link REIT’s investment mandate out of Hong Kong, no step will be taken in relation to the MOU with China Vanke. There is no legally binding commitment by either party involved in the MOU. The Manager will seek investment opportunities in the PRC as consistent with The Link REIT’s long term growth strategy.