According to the Zhitong Finance App, China Merchants Commercial Real Estate Trust (01503) announced interim results for the six months ended June 30, 2024, with revenue of 0.266 billion yuan (RMB, same below), up 11.9% year on year; distributable revenue of 62.018 million yuan, up 26.3% year on year; distributed HK$0.06 per fund unit.

The announcement said that during the reporting period, the occupancy rate of the overall property portfolio increased from 86.8% to 92.7%, up 5.9 percentage points from December 31, 2023. The main reason is that after the Garden City was upgraded, new tenants settled in a large area, including the main store, which increased its rental rate by 11.3 percentage points. The average occupancy rate of office buildings rose steadily to 94.7% due to the adoption of a “price for volume” strategy, an increase of 4.7 percentage points.

Under the influence of this strategy, current rents for office buildings, especially the two Grade A office buildings, have dropped significantly. In order to increase the rental rate, the company offered many concessions during negotiations on lease renewal and lease expansion. At the same time, in order to attract new tenants to move in as soon as possible after the upgrade and restore the rental rate, the company also gave Garden City significant rent concessions, causing its current rent to drop significantly.