Following is the transcript of a CNBC interview with Ada Wong, CEO and CIO, of Champion REIT. The interview was broadcast on CNBC on 25 April 2017 at 09:40AM SG/HK Time, during CNBC's "Hong Kong versus Singapore" theme week.
All references must be sourced to a "CNBC Interview".
Interviewed by Bernie Lo, Anchor, CNBC.
Bernie Lo: Ada Wong joins us on the show. She is the CEO and CIO of Champion REITs Management. She joins us here in Hong Kong. How are you doing?
Ada Wong: Hi, good morning.
Bernie: How's the market performing for you? Give me the, do all the house, do all the homework, I mean housekeeping. First of all – occupancy, we're on the other side. Vacancy, rental revisions and all that. Is everything kind of clicking along nicely for the company?
Wong: Yeah it is, I think for Three Garden Road, the occupancy has been quite stable. And you know, Central, given there's not going to be any new supply, even though like Mary Copper is coming up but that's not going to be completed until five years from now. So you know, with this like very tight supply demand, we're in good shape. For Langham Place, it's very stable. You know, it's mass market focused, very resilient, targeted at local. So everything is on the right track.
Bernie: What, so I mean are we talking about? I mean without giving away trade secrets, are we, like most Hong Kong landlords, are we talking about low, low single digit, almost non-existent type of vacancies at this point? I mean, somewhere in the three to five range most lifely. And what I mean, typically speaking, rental revisions tend to be done on a, I guess, depends on the tenant, but usually a three to five year basis?
Wong: Yeah three to five year basis for rental revisions, but for our office – like we are playing a catch up game. We still have very substantial rental revision growth like because it was our law in 2014. And right now, 2017 is like a three year mark, so we have a very, very substantial rental revision.
Bernie: We still have several ways to go, so our next few years are only going to get better the numbers will improve as the rents catch up to what the fair market values are right?
Wong: That's right.
Bernie: Another thing which kind of interested me, I've been meaning to ask you for awhile. I think we started to address this last time when Emily and you and I caught up. I mean, Champion REITS is a very neat and tidy company with a limited number of resources. You focus on you know, your philosophy is not to own a 150 different properties. You know, you try to limit what you own but you try to manage what you own well. At what point do you try to get bigger? When do you sort of reassess what is a critical mass for you? What is the right size for a company like Champion REITS?
Wong: Well, actually, we have been looking for opportunities and it's just a matter of when can it be materialized. You know, the market is very competitive, with all of the Chinese developers coming here to Hong Kong.
Bernie: You can't get a good deal here in Hong Kong, there's no such thing as a good deal anymore, is there?
Wong: Well, it's just a very competitive market. But you know it's good that you know, because of the competition that means like you know, there is strong support on the price.
Bernie: And that's a relatively new phenomena which you just brought up and I'm glad you brought it up. Particularly in the development side of things too. I mean, I used to go to auctions in the 90s, you know, we used to hold the paddles up and 'oh, it's Sinoland; oh it's Cheung Kong; oh, it's you know..Chinese estates bidding'. It was one of six people that bid for land. And nowadays it's like huge old properties you know, it's all the mainland money which is coming in. Is it the same sort of thing that you're up against in the REITs business as well?
Wong: Well, I think that for REITs, we mostly invest in you know, completed properties and those are, especially for office properties. You know every single Chinese, you know financial institutions, they want to have their own office buildings. So I think in the office space it's definitely very, very competitive with the Chinese as well.
Bernie: Ok, it's always nice talking to you, appreciate your time. Thank you very much.