High-quality property portfolio: The company's property portfolio includes three properties: Hong Kong Asia Logistics Center - Shunfeng Building, Foshan Guicheng Fengtai Industrial Park, and Wuhu Fengtai Industrial Park. The total construction area is about 234,000 square meters, the total leasable area is about 308,000 square meters, the average occupancy rate is 94.9%, and the total assessed value is HK$6,094 billion. The property portfolio is located in an international core city, a satellite city of a first-tier city, and a strong third-tier city with development potential. The asset package has the characteristics of a mix of old and new properties, a high average rental rate level, and strong risk resistance.
Relying on SF Holdings, tenant stability is high: The company's customer concentration is high. As of 2020M9, the top five customers accounted for 67.1% of the total leasable area, contributing 83.3% of the rental income. Among the top five customers, 1 to 3 are SF Express associates, accounting for 63.5% of the total leasable area and contributing 74.8% of the rental income.
The high proportion of connected tenants means that tenancy agreements are highly stable. SF Holdings is a leading logistics service provider with rapid development in China, and is expected to bring stable rental income to SF Express housing.
The tenancy period is long and the structure is healthy: As of 2020M9, the average tenancy maturity period for the enhanced property portfolio was 4.1 years, the tenancy period for SF Linked Tenants was about 5 years, and more than half of the third party leases were at least 3 years.
In terms of leasable area, 61% of tenants expire in 2025 or later; in terms of rental income, 71.7% of rental income expires in 2025 or later, and the lease term structure is healthy.
Properties in Hong Kong are well-located and scarce: Asia Logistics Center - Shun Fung Tower is located in the Kwai Tsing sector. It is less than half an hour from major transportation hubs such as the airport, terminal and cargo terminal. It is close to Kwai Tsing Container Terminal 9 and Ngong Shuan Chau Bridge. It is only 19 km from Hong Kong International Airport, and has an excellent geographical location. Future incremental supply in the Hong Kong modern logistics real estate market is limited. According to JLL, only 18.8% of modern logistics properties have been in use for less than 10 years. As a high-quality modern logistics property in Hong Kong, Asia Logistics Center - Shunfeng Tower is highly scarce. Judging from the occupancy rate situation, even affected by public health events, Hong Kong properties maintained a high occupancy rate of over 90%, and were highly resistant to risk.
High distribution stability: SF Real Estate's three properties have excellent location conditions, Hong Kong properties have outstanding scarcity and stable performance, there is strong certainty about future property growth in Foshan, there is plenty of room for property growth in Wuhu, and the property portfolio is high. Furthermore, with a team of experienced and operational managers, the three major properties are expected to maintain high rental rates and steady rent growth. Currently, the REIT manager plans to allocate 100% of the annual revenue that can be distributed. Investors are advised to pay attention.
Risk warning: Risk of macroeconomic fluctuations, rental rates falling short of expectations, tight liquidity, and rental income falling short of expectations.