The Completion of Garden City Shopping Centre in Shenzhen Attracts A Large Number of New Tenants

HONG KONG, March 15, 2024 /PRNewswire/ — China Merchants Commercial Real Estate Investment Trust (“CMC REIT” or “the Trust”, HKEX stock code:1503), announced its annual results for the year ended 31 December 2023. During the reporting period, total revenue of CMC REIT for the Reporting Year was RMB489 million, an increase of RMB57 million or 13.3% over the revenue for 2022.

The final distribution per unit for the period is HK$0.0450. Together with the paid interim distribution per unit of HK$0.0475, the total distribution per unit for the Reporting Year amounted to HK$0.0925, equivalent to a distribution yield of 6.9%, based on the closing price of CMC REIT on 29 December 2023 (being HK$1.34).

Total net borrowings of CMC REIT were RMB4,054 million, equivalent to a gearing ratio of 39.0%. This ratio is lower than the permitted limit of 50% as stipulated by the Code on Real Estate Investment Trusts (the “REIT Code”). Gross liabilities (excluding net assets attributable to unitholders) as a percentage of gross assets were 53.0% (2022 year end: 62.6%). As at 31 December 2023, net assets attributable to Unitholders amounted to RMB3,392 million or RMB3.01 per Unit, equivalent to HKD3.32 per Unit based on central parity rate as announced by the People’s Bank on 29 December 2023.

Business Performance

Over the Reporting Year, the occupancy rate of the overall property portfolio increased 3.6 percentage points, from 83.2% as at 31 December 2022 to 86.8% as at 31 December 2023. The average occupancy rate of our office buildings increased 4.1 percentage points to 90.0%. There was a marked improvement in occupancy rates at our Grade-A office buildings. At Onward Science & Trade Center the occupancy rate increased by 11.9 percentage points while New Times Plaza the occupancy rate increased by 5.6 percentage points. To achieve this, the passing rent at these two properties was allowed to decrease by around 6%. In contrast, at our three properties in the Net Valley there was no need to trade rental rates for occupancy and the passing rent increased by varying percentages compared to the same period in 2022.

The occupancy rate of Garden City Shopping Centre, our only retail property, was significantly affected for most of 2023 as it underwent upgrading works that left one-third of the floor area subject to renovation work and unoccupied during most of the year. Currently, the occupancy rate has recovered to 73.7%. As the renovation and upgrading of Garden City Shopping Centre has been completed, over time the occupancy rate is expected to further recover to prerenovation levels.

New Times Plaza

During the Reporting Year of 2023, the occupancy rate of New Times Plaza increased by 5.6 percentage points. However, due to the impact of the overall economic downturn and the competition from adjacent Grade-A office buildings, the Manager lowered its asking rents to a certain extent, in order to boost the occupancy rate, which resulted in a decrease of the passing rent by RMB10.5/sq.m. or 5.7%. In 2024, the Manager will continue to prioritize the occupancy rate as the main business objective and efficiently utilize various resources to optimize operating conditions. The valuation of New Times Plaza was impacted by the drop in Grade-A office rents in Shenzhen and the overall instability in the leasing market. Its valuation decreased by RMB84 million or 4% compared to the same period last year, dropping from RMB2,084 million to RMB2,000 million.

Three properties within the Shekou Net Valley(Cyberport Building, Technology Building, and Technology Building 2)

Against the background of a sluggish economic environment, the operational performance of Net Valley Properties generally continued to improve. During the Reporting Year, both the occupancy rate and passing rent of Technology Building 2 increased, with the occupancy rate rising by 6.1 percentage points as compared to a year ago while the passing rent increased by RMB4.0/sq.m., representing a growth of 3.3%. Technology Building continued to maintain full occupancy while its passing rent increased to RMB133.6/sq.m., representing a growth of 2.9%. At Cyberport Building there was a 4.5 percentage point decrease in occupancy rate as compared to the previous year-end but the current rental rate increased by RMB5.2/sq.m., equivalent to a 4.1% increase.

In terms of valuation, Technology Building 2 decreased by 2.2%, while there was an increase in the valuation of Cyberport Building and Technology Building, by 0.3% and 1.6% respectively.

Onward Science & Trade Center

The occupancy rate of the Onward Science & Trade Center increased significantly from 70.0% to 81.9%, rising by 11.9 percentage points as compared to the same period last year. Due to the adoption of a more lenient leasing policy, the passing rent decreased from RMB319.3/sq.m. to RMB301.4/sq.m., representing a decrease of 5.6%. In 2024, the Manager will continue to focus on improving the occupancy rate while minimizing any impact to the passing rent.

In terms of valuation, the Onward Science & Trade Centre experienced a decrease as compared to the same period last year, mainly due to the impact of the decrease in market rent and the property passing rent, as well as the shortening remaining land use period.

Garden City Shopping Centre

Due to the staggered closing of sections at Garden City Shopping Centre as part of its renovation project, the occupancy rate fell to as low as 53.2% in mid-2023, which is one of the main reasons for the underperformance of this asset in 2023. In order to quickly bring the occupancy rate back up and attract new tenants, the Manager then offered appropriate rental reductions and incentives. The result was a decrease of RMB28.8/sq.m. or 15.9% in passing rent as compared to the end of 2022.

The weaker-than-expected recovery in overall economy also hampered the recovery of operations at Garden City Shopping Centre, and therefore the Manager has been focusing on placing resources in Garden City Shopping Centre to increase its attractiveness to retailers. The completion of Garden City Shopping Centre’s refurbishment at the end of 2023 ushered in a brand new look, with the introduction of a large number of new tenants and significantly increased foot traffic. Occupancy was restored to 73.7%, representing an increase of 20.5 percentage points as compared to the mid-2023, and even a 1.5 percentage points increase as compared to the same period in 2022.

The renovation of Garden City Shopping Centre greatly affected the operating income of Garden City Shopping Centre in 2023 and this has had an impact on its valuation. Because of the lower passing rent, the assessed value of the mall decreased by RMB60 million as compared to the last year.


“Stability” is the theme for China’s economy in 2024. The Chinese government is providing strong support to the economy by proactively adjusting its monetary and fiscal policies to support economic development and stabilize the market. At the beginning of 2024, the Ministry of Housing and Urban-Rural Development delegated the function of urban real estate regulation and control to provincial government leading to the introduction of favourable local policies, the revoking of restrictions on purchases and the lowering of down payments. In February, the People’s Bank of China lowered the 5-year Loan Prime Rate, which further reduced the cost for home buyers and boosted activity within the property market. Nonetheless, the year will remain a challenging one for China as geopolitical conflicts intensify while expectations of early US interest rate cuts recede.

Mr. HUANG Junlong, Chairman and Non-executive Director of CMC REIT, said, “With an aim to broaden sources of income and reduce expenditure, the Manager seeks to provide stakeholders with high-quality and sustainable returns. The Manager will closely monitor market conditions and adjust its operating strategies flexibly to help its properties generate high-quality returns for CMC REIT’s unitholders. The current acquisition strategy of CMC REIT is focused on offices in the core business districts of first-tier cities and shopping centers in first- and second-tier cities with relatively strong purchasing power. The Manager continues to seek suitable investment targets in these markets, with a view to diversifying the asset class and location of CMC REIT’s portfolio, enhancing the portfolio’s robustness and increasing the returns to Unitholders. The Manager will maintain the gearing ratio of CMC REIT stable and further expand the asset under management, by adopting various investment strategies. At the same time, the Manager will review the capital structure of CMC REIT from time to time, with a view to further optimizing the debt structure and exploring further cost reductions, including funding costs and project management fees.”

Mr. HUANG Junlong stated, “The Manager believes there is a reasonable chance that the distributable income of CMC REIT will recover in 2024, given the incremental income from the reopening of Garden City Shopping Center and the full year’s impact of the RMB2,400 million refinancing in 2023.”

About China Merchants Commercial REIT

China Merchants Commercial REIT is a Hong Kong collective investment scheme constituted as a unit trust and authorised under section 104 of the SFO. China Merchants Commercial REIT was launched by a well-known state-owned enterprise: China Merchants Shekou Industrial Zone Holdings Co., Ltd. (1979.SZ). It was listed on the Main Board of the Hong Kong Stock Exchange in December 2019, marking the first successful listing of a REIT in Hong Kong since 2014. It is also the first REIT to be managed by a state-owned corporation of the People’s Republic of China. China Merchants Commercial REIT is a REIT formed to primarily own and invest in high quality income-generating commercial properties in the PRC (including Hong Kong and Macao but excluding the CML Cities). Its initial focus is: (i) the Greater Bay Area (other than Foshan and Guangzhou, being two of the CML Cities), which is where the initial five Properties are situated; and (ii) Beijing and Shanghai. China Merchants Commercial REIT holds six high-quality properties, with five located in Shekou, Shenzhen, and one located in Beijing. It is managed by the REIT Manager whose key investment objectives are to provide Unitholders with stable distributions, sustainable and long-term distribution growth, and enhancement in the value of China Merchants Commercial REIT’s properties.

For more information about China Merchants Commercial REIT, please visit its corporate website: