BHG Retail Reit seeks to buy Beijing mall for S$455m

Singapore

THE manager of BHG Retail Real Estate Investment Trust (Reit) is proposing to acquire a mall in Beijing for S$455 million.

The proposed acquisition of Badaling Outlets would be the Reit's first investment in an outlet mall, the manager said in a regulatory filing on Tuesday.

The Reit's trustee, DBS Trustee Limited, has entered into a conditional share purchase agreement with vendor Horizon Thrive International to acquire all shares in Premier Outlets Investment.

Premier Outlets Investment holds Beijing Badaling Outlets Co, which owns the outlet mall. Horizon Thrive International is wholly-owned by Chang Dingjie, a director of Beijing Hualian Group Investment Holding Co, the Reit's sponsor.

Under the agreement, the manager has proposed to issue up to 260 million new BHG Retail Reit units to satisfy part of the purchase price. It will also stump up S$260 million in cash.

The units will be priced at the higher of either S$0.75 per new unit or the prevailing 10-day volume weighted average price prior to the issue of the units - for an aggregate amount of S$195 million.

The total acquisition cost amounting to S$471.9 million includes professional and other fees and expenses of about S$16.9 million.

Badaling Outlets, which is made up of 14 buildings, has a gross floor area of around 58,348 square metres, net lettable area (NLA) of around 38,797 sq m and site area of 128,690 sq m.

The land use right of the outlet mall, which was completed in 2014, will expire on Sept 24, 2037.

As at Aug 31, the mall is fully occupied and has a weighted average lease expiry of 0.8 year by gross revenue, and 0.9 year by NLA.

It is valued at 2.99 billion yuan (S$578.6 million) by independent valuer JLL commissioned by the manager, and 2.97 billion yuan by independent valuer Knight Frank commissioned by the trustee.

The Reit's manager said the asset acquisition would enhance BHG Retail Reit's portfolio and exposure to the fast-growing premier retail outlet mall sector in China.

Unitholder approval at an extraordinary general meeting is required for the purchase of Premier and issuance of new units to the vendor, plus other matters in connection with the deal.

BHG Retail Reit units last traded flat at S$0.695 on Nov 29.