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Fortune Real Estate Investment Trust (REIT) plans to spend about HK$150 million (S$25.95 million) to renovate the western block of Fortune Kingswood mall in Tin Shui Wai, according to DBS Vickers Securities.
“Despite the income shortfall during the renovation period, this initiative should help turn Fortune Kingswood into a regional mall in the long run, enhancing its competitiveness,” it said.
However, the area occupied by the supermarket will be reduced from the current 57,000 sq ft. Nevertheless, the trust has secured tenants for 50 percent of the area that will undergo renovations.
DBS Vickers expects rental reversions in the mall to remain healthy at 10 to 15 percent for FY2018, with restaurants continuing to perform well, while home appliance stores have posted signs of improvement recently.
The renovation works are expected to start soon and will be undertaken in three phases with completion scheduled by early-2020.
Meanwhile, DBS Vickers revealed that Fortune REIT is seeking potential acquisitions following the HK$2 billion (S$345 million) sale of Provident Square mall in December 2017, with HK$1.1 billion of the proceeds used to repay debts.
“With circa HK$900 million cash on hand, Fortune REIT is exploring acquisition opportunities. But given low market yield for retail assets, it could be challenging to pursue yield accretive acquisitions,” it added.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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