The 214,284-sqm property has a three-storey warehouse and two 14-storey support buildings.
Singapore-listed EC World REIT has proposed to acquire Fuzhou e-commerce for $220.97m (RMB1.11b) from its sponsor, which will be fully funded by debt.
The 214,284-sqm property comprises a three-storey warehouse with a single-storey basement and two 14-storey office and support buildings which are primarily office spaces for auxiliary use and for dormitory purposes. The asset sits on 88,000 sqm of land with land tenure of a further c.40 years, ending 2 May 2059.
SCCM analyst Zhao Yiyuan added that the acquired asset “adds on to portfolio stability,” citing its 5+5 years’ master lease structure with 2.25% p.a. rental escalation for five years, with the sixth year renewal at fifth year rate or higher.
DBS Group Research analyst Carmen Tay noted that the asset is adjacent to one of the REIT’s existing assets – Fu Heng Warehouse – which is also focused on e-commerce related fulfilment activities, creating a 308,571-sqm logistics hub.
“The acquisition of Fuzhou E-commerce, which is nearly twice the scale of Fu Heng Warehouse, allows the group to unlock operational efficiencies and further enhance its proposition in Hangzhou’s (and the Greater China) booming e-commerce industry,” she said.
The site is located near to water transportation facilities provided by Fuchun rivers and connectivity to downtown Hangzhou. “This catchment is also well supported by demand from a wide spectrum of e-commerce players – ranging from brand manufacturers, online marketplaces to last mile delivery companies, as well as other auxiliary facilities,” Tay added.
The warehouse is operated by Ruyicang (a wholly-owned subsidiary of the sponsor), an omni-channel logistics service provider in China and one of the earliest key partners and service providers of Cainiao network (Alibaba’s logistics arm).
The proposed acquisition will boost ECW REIT’s e-commerce exposure by net leasable area (NLA) from c.35.3% in FY2018 to c.49.7%, and c.36.7% to c.45.6% in net property income (NPI) terms, Tay said. “Taking into account the new proposed master lease agreements for the acquisition, portfolio WALE will also be lengthened significantly from 1.8 to 4.8 years.”
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