BHG Retail REIT to acquire Beijing mall for $455 mil in RTO deal

PC Lee

SINGAPORE (Dec 3): The manager of BHG Retail REIT is acquiring the property known as Badaling Outlets in Beijing, China, for $455 million.

The manager plans to fund the acquisition by issuing new BHG Retail REIT units to the seller, and also via a private placement and debt.

Units of BHG Retail REIT last traded at 70 cents, giving it a market cap of $352.7 million.

If successfully completed, the acquisition will constitute a reverse takeover of BHG Retail REIT.

The manager said in its regulatory filing the acquisition will expose BHG Retail REIT to the fast-growing premium retail-outlet mall sector in China and enhance its retail REIT portfolio.

Located at Chenzhuang Village at Nankou Town in Changping District, the property, which comprises 14 buildings, was completed in 2014 and its leasehold will expire on Sept 24, 2037.

Badaling Outlets has a site area, gross floor area (GFA) and net lettable area (NLA) of 128,690 sq m, 58,348 sq m and 38,797 sq m.

The property was independently valued at $480.1 million and has a weighted average lease expiry (WALE) of 0.8 years by gross revenue and 0.9 years by NLA.

With a current occupancy rate of 100%, the net property income (NPI) for FY2018 was RMB216.6 million ($42 million) while the NPI for 1H2019 was RMB103.4 million. These translate into an NPI yield of 8.7% and 8.3% respectively.

The seller of the property is said to be non-interested party Chang Dingjie, a director of Beijing Hualian Group Investment Holding Co.