Singapore-listed EC World REIT has agreed to buy a three-storey e-commerce warehouse and two 14-storey offices in the Chinese city of Hangzhou for a combined S$223.6m (US$164m).
The Fuzhou E-Commerce property, located at 9 Mingxing Road in the Fuyang district, features 171,795 sq.m. of warehouse space and 42,489 sq.m. of office and auxiliary area, the buyer announced.
The fully-occupied property is let to Fuyang Yunton E-Commerce and Zhejiang Yuntong E-Commerce on five-year leases, with further five-year options.
The office buildings are undergoing refurbishment works to convert a portion of office space into dormitories.
To secure the asset, the REIT will acquire Flutric Investments, a holding company which owns 34.02% of the property, from British Virgin Islands-based Strength Outline Holdings.
EC World REIT will then purchase the remaining 65.98% interest in the property from local firm Hangzhou Unilogix Holdings Group.
Hangzhou, the capital of the Zhejiang province, has a population of 9.8m and is one of the core cities in the Yangtze River Delta Economic Zone.
The city, home to Alibaba Group’s global headquarters, has become a hub for e-commerce, where the sector grew by 17.5% in Hangzhou last year.
EC World REIT also owns the adjacent Fu Heng warehouse and could create an expanded 308,571 sq.m. logistics hub close to the Changshen Highway and Hangzhou city centre from the deal.
The deal also offers the opportunity to collaborate with the warehouse operator Ruyicang, an e-commerce logistics, fulfillment and service provider in mainland China.
Ruyicang is one of the key partners to the Cainiao Network, Alibaba’s logistics platform, and is also a core service provider to Alibaba’s LST platform.
LST is one of Alibaba’s new online-to-offline retail strategies, connecting convenience and neighbourhood stores with Alibaba and Cainiao’s extensive network to improve store operations.
Cainiao is planning to connect more than 1m retail stores within three years.
Ruyicang currently processes about 8,000 to 10,000 parcels for LST in the Fuzhou E-Commerce warehouse daily.
EC World REIT invests in real estate used primarily for e-commerce, supply-chain management and logistics purposes, mainly in the People’s Republic of China (PRC).