Sunlight plans sell-off to tighten focus of portfolio

PUBLISHED : Wednesday, 27 June, 2012, 12:00am
UPDATED : Wednesday, 27 June, 2012, 12:00am


The Sunlight Real Estate Investment Trust aims to reposition its portfolio by selling four office and retail properties, providing capital for future acquisitions.

'Sunlight Reit has operated for nearly six years now and we think it's time to reposition our portfolio. To do this, we have to either enhance our assets or acquire some,' Keith Wu Shiu-kee, chief executive at Henderson Sunlight Asset Management, the trust manager, said.

Sunlight Reit was established in December 2006 when Lee Shau-kee's Henderson Land spun off and listed 12 offices and eight retail properties it owned in Hong Kong.

Wu said he planned to sell some smaller properties valued at HK$200 million or below to raise cash that could be used to fund future investments or provide working capital.

'These properties are a bit too small and we don't own the entire buildings, meaning it would be difficult to do maintenance and enhancement works. Since the property market is still rosy, shouldn't we consider realising the value of these assets for future use?' he asked.

The four assets Sunlight is offering through public tender include two retail properties of between 4,226 square feet and 7,086 sqft in North Point. The properties, Supernova Stand and Glory Rise, had an estimated value of HK$51 million and HK$75 million, respectively, at the end of last year, he said.

Also up for sale is the trust's HK$134 million Sun Fai Commercial Centre in Mong Kok, which has 41,272 sqft of office space and 1,479 sqft of retail area, and the Yue Fai Commercial Centre, which has a combined commercial and retail space of 42,751 sqft, and is expected to fetch HK$205 million.

Together the properties have a total estimated value of around HK$465 million, with a net rental yield from 3.03 to 3.48 per cent. The tender will close on or about July 6.

Sunlight Reit had a portfolio of eight retail and 12 office properties and total assets of about HK$12 billion, Wu said.

In 2010 the trust offered to sell Glory Rise and Palatial Stand in Hung Hom. But it held them when offers far exceeded its estimates as the Hung Hom property would be near one of the MTR stations on the planned Sha Tin-Central railway link.

Wu said the trust aimed to maintain a balance of retail and office properties. While it would seek opportunities in both sectors, retail was 'more interesting' as office space had lower potential,

Jeff Yau Check-man, an analyst at security brokerage DBS Vickers Hong Kong, said he agreed with Sunlight's move to sell the four properties.

'Some retail spaces at these properties are quite small. Usually, there is room for asset enhancement in larger retail properties. Relatively, other properties in its portfolio have better upside potential,' Yau said.