[ET Net News Agency, 11 September 2018] Daiwa Research said Yuexiu REIT (00405)
attended the Daiwa REIT Day last week, providing updates on its business operations.
Overall, the research house believes the solid rental outlook at GZ IFC and Wuhan Yuexiu
Fortune Centre bodes well for Yuexiu REIT's DPU prospects, and that its average funding
cost of 4% by the end of this year looks reasonable.
Yuexiu REIT has renewed 60% of leases at GZ IFC offices expiring in 2018, with the new
leases witnessing 10% increase in rents. GZ IFC's passing rent of CNY230/sq m/month is
already at the higher end in Pearl River New Town, but Daiwa thinks Yuexiu REIT will not
be under a lot of pressure in its lease renewal in 4Q 2018-2019, as new office supply in
the area will be limited.
It expects Wuhan Yuexiu Fortune Centre to help sustain its DPU growth. The offices at
the project achieved an average rent of CNY93/sq m/month and occupancy of 59% in 1H, and
Daiwa forecast them to go up to CNY100/sq m/month and 80-85%, respectively, by end-2018.
(KL)