The manager of EC World REIT says it has renewed a major lease amounting to 159,172 square metres in relation to Hengde Logistics with China Tobacco Zhejiang Industrial Co.
“Working closely with our property manager in China, we have been engaging China Tobacco on the lease renewal since October 2019. However, the negotiation was delayed by the Covid-19 situation,” says Goh Toh Sim, executive director and CEO of the manager.
“We are pleased to report that EC World REIT has successfully renewed the lease at competitive rates. With the renewal of the lease in relation to Hengde Logistics, the Manager has substantially renewed the expiring leases of EC World REIT for 2020. We will continue to work closely with the property manager in China to optimize portfolio performance,” Goh adds.
China Tobacco has committed to a lease term of 38 months. The new rental rates represent a 1.1% increase over the expiring rental rates.
The warehouse management services currently provided to China Tobacco will no longer be required for the renewal lease term due to internal restructuring in China Tobacco. The termination of the service will reduce EC World REIT’s total revenue by some 1.1%.
Separately, EC World REIT has also leased 22,545 square metres of warehouse and dormitory space at Wuhan Meiluote to a “reputable e-commerce company”.
This new lease was committed at a 4.3% increase in rental rate compared to the previous tenant for a period of three years (warehouse space) and two years (dormitory space).
The lease will begin in end October 2020, bringing Wuhan Meiluote’s occupancy to about 79.5%.
Units in EC World REIT closed flat at 68.5 cents on Oct 14.
See: EC World REIT to see stronger 2H20, chance of e-commerce acquisitions: RHB
