Hui Xian agrees to buy complex in Chongqing from Cheung Kong and Hutchison Whampoa

Hui Xian Real Estate Investment Trust is buying a commercial complex in Chongqing from its parent firms Cheung Kong (Holdings) and Hutchison Whampoa for 3.91 billion yuan (HK$4.92 billion).

The move marks the reit's first step in its long-term plan of establishing a portfolio of strategically located, large integrated property developments in mainland cities under the "Oriental Plaza" brand, leveraging the brand recognition of Beijing Oriental Plaza.

The property to be acquired is the Metropolitan Plaza in the Jiefangbei central business district of Chongqing.

It comprises a 12-storey shopping mall of about 90,000 square metres, a Grade A office building of over 54,000 square metres and a 353-space car park. The total gross floor area is about 164,000 square metres.

The reit manager, Hui Xian Asset Management, intends to rebrand "Metropolitan Plaza" to "Metropolitan Chongqing Oriental Plaza", and position it as the second "Oriental Plaza" under the Hui Xian Reit.

The completion of the acquisition is conditional upon the approval of the deal by independent unit holders of the reit. An extraordinary general meeting is scheduled at the end of the month for the purpose, according to the company.

Units in the reit began trading in April 2012. It was the first Hong Kong reit to be denominated in yuan.

Hui Xian said the acquisition would increase the distribution to unit holders.

Opened in 1997, Metropolitan Plaza has a strong track record. For the three years ended December 31, its yearly revenue and rental-related income rose gradually from about 261 million yuan to 268 million yuan and then 282 million yuan.

The company said Cheung Kong and Hutchison agreed to provide an annual income guarantee of 299.28 million yuan for a period of five years. The guaranteed income translates into a yield of about 7.65 per cent.

Chongqing is one of the mainland's fastest growing local economies. In the first half of this year, the city's gross domestic product reached 644 billion yuan, up 10.9 per cent year on year, the highest growth rate among all key cities on the mainland.

Urban disposable income rose 9.6 per cent and retail sales were up 13.1 per cent year on year in the first half of this year.

Shares of Hui Xian rose 0.9 per cent to HK$3.37 yesterday.