38 Garden Road


Project SIZE : 1,656,000 sq ft

Date of Completion :

Connected office towers - 37 storey and 47-storey towers

Conveniently located by Victoria Park and connects Central to Pacific Place and Wanchai


REIT in talks for Citibank Plaza buyout

Champion Real Estate Investment Trust (2778), which holds Citibank Plaza as its only asset, plans to buy out the Central office building from Kerry Properties (0683) for nearly HK$1 billion, sources said.

Eagle Asset Management, the manager of Champion REIT, said Tuesday that it is at a preliminary stage of discussions to buy three floors of Citibank Plaza.

A binding agreement has not been made, the manager said. Details have not been disclosed.

Located at 3 Garden Road, Kerry owns the 34th, 36th and 37th floors in Citibank Plaza offering a total gross floor area of nearly 53,000 square feet. It is valued at between HK$15,000 and HK$18,000 per sqft, or as much as HK$950 million, surveyors said.  

Chief financial officer Christopher Wong Wing-kee declined to comment Tuesday.

Wong said earlier this month that Kerry intends to sell non-core assets in Hong Kong. He did not reveal details including prices.

According to the Champion REIT prospectus, the trust would not acquire properties within one year of its listing in May.

But if the buyout offer for Citibank Plaza is concluded, it has to apply to the stock exchange for a waiver.

Shares of Champion REIT closed unchanged Tuesday at HK$3.88 - but that still left the stock down 24 percent since its debut.

The REIT, which generates income from the Central property which was 94.2 percent let in the first half of the year, offers a dividend yield of up to 7.3 percent in 2006.

Citibank Plaza is expected to benefit from the limited new supply of office space in Central in the next five years, as office building rentals will continue to rise through lease renewals, analysts said. Demand for Grade A office space remains strong this year, Knight Frank Petty said.

The property consultant said Grade A office rents were up by about 1percent in August to an average HK$52.8 per sqft, representing about 40 percent growth from a year ago.

Knight Frank Petty's executive director, indicated that pre-lease activity of new Grade A office space was robust last month. In Central, Legg Mason committed to the entire 12th floor of York House, developed by Hongkong Land, totaling 8,275 sqft for more than HK$100 per s qft .  -by Raymond Wang  HONG KONG STANDARD  27 Sept 2006


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