New owner of Link Reit’s 17 Hong Kong shopping centres says rent rises not ‘winning formula’
Gaw Capital Partners believes revitalising the malls and making them more attractive to shoppers would help both tenants and the company
Goodwin Gaw, chairman of Gaw Capital Partners, believes he has found the formula for making a profit from his company’s new investment in 17 Hong Kong shopping centres from The Link Real Investment Trust (Link Reit), without having to add pressure to tenants.
The Hong Kong-based Gaw Capital led a consortium with partners including US investment bank Goldman Sachs and China Great Wall Asset Management in the purchase of the malls for HK$23 billion (US$2.9 billion) late last year, the biggest ever retail property transaction in the city.
The deal immediately triggered concerns from tenants of the properties that rents would rise sharply. But Gaw said he did not believe that an immediate increase in rents was a winning formula.
“We hope to utilise our experience to evolve these malls into refreshed and renewed centres, and that will result in improved retail sales.
“For tenants, if we charge them rent based on a percentage of turnover, they can afford to pay higher rents as they earn more from the rebound of retail sales. That is the win-win business model,” he said.
He noted that while Gaw Capital needed to make profits for shareholders from the investment, as a private company it had more flexibility.