Bloomberg News

Wharf Rises on Ocean Terminal Lease Extension: Hong Kong Mover

June 05, 2012

Wharf Holdings Ltd. (4) rose in Hong Kong trading after saying it has accepted the city state government’s offer to renew the lease for a shopping and office complex in one of the city’s biggest tourist districts.

The Hong Kong-based landlord rose as much as 5.1 percent and was trading 2.7 percent higher at HK$40.25 as of 2:33 p.m. local time. Its parent Wheelock & Co. rose 2.2 percent to HK$23.75. The government has re-granted the lease for the Ocean Terminal in the Tsim Sha Tsui district to Wharf for 21 years, according to a statement filed to Hong Kong’s stock exchange today.

Hong Kong’s retail rents have surged in the last decade, fueled by mainland Chinese shoppers seeking tax-free luxury fashion and accessory brands. Shares of Wharf, which also owns the Times Square shopping mall in the city’s Causeway Bay district, have almost doubled since early 2009.

“A longer tenor gives more certainty,” Nicole Wong and Susanna Leung, analysts at CLSA Asia-Pacific Markets, wrote in a report today. “The deal means the company will continue to hold the largest mall in the city for another 21 years and will allow it to enhance diversity of its tenant mix, boosting rental income.”

Wharf will pay HK$7.9 billion ($1.02 billion) in land premium and an annual rent of 3 percent of the “rateable” value of the Ocean Terminal lot, it said in today’s statement.

Wharf made about HK$701 million in pretax rental income from the Ocean Terminal complex, with maximum gross area of 85,700 square meters (922,467 square feet), the company said. The building is adjacent to Harbour City, an office and mall complex owned by Wharf.

To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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