Liquid real estate Issue 05
Champion Reit bulks up with Langham Place acquisition
The deal involves Champion Reit, Hong Kong’s largest commercial Reit, and one of a sequence of trusts that were launched with great fanfare in Hong Kong in 2006 only to perform disappointingly. Apart from the fact that it owns only one asset, Citibank Plaza in Hong Kong’s Central district, it is also well known for its use of financial engineering.
Champion, like other Hong Kong Reits launched in 2006, used interest rate swap agreements in order to boost yields in its earlier years by deferring interest payments to later in the trust’s life. The logic for this at the time of launch was that commercial assets...
