Fortune Reit in retail push

PUBLISHED : Friday, 17 December, 2010, 12:00am
UPDATED : Friday, 17 December, 2010, 12:00am

Fortune Real Estate Investment Trust (Fortune Reit) plans to acquire more retail centres in Hong Kong next year because of the low-interest-rate environment and positive signs in the retail sales market.

Justina Chiu, deputy chief executive of ARA Asset Management (Fortune), the manager of the reit, said Fortune still had room to make acquisitions that could provide good yields.

With a gearing of 22 per cent, the company could make acquisitions worth up to about HK$2.6 billion without tapping the equity market, before its gearing hits the statutory borrowing limit of 35 per cent, according to Fortune Reit.

'We are in talks over some deals and hopefully some will materialise next year,' Chiu said.

Chiu is optimistic on the outlook for the retail sales market and said Fortune Reit would focus on shopping centres in large housing estates. She described Fortune Reit as one of the most aggressive players in terms of acquisitions.

The reit, which listed in Singapore in 2003 and in Hong Kong this year, holds a portfolio of 14 retail properties in the city, comprising about 2 million square feet of retail space and parking space for 1,669 vehicles.

Chiu unveiled the expansion plan yesterday when she announced a HK$70 million renovation of City One Plaza - the second phase of City One Sha Tin retail centre.

The company increased rents by 15 to 20 per cent after renovation of the first phase, also known as the Ngan Shing Commercial Centre. Chiu said renovation of the second phase of the 400,000 sqft City One Sha Tin retail centre would begin in the second half of next year, and she expected it to be completed by the end of 2012.

The firm also plans to revamp the 300,000 sqft Ma On Shan Plaza in Ma On Shan for about HK$50 million in the second half of next year.