KUALA LUMPUR, March 9 (Bernama) -- ACE Market-listed Kanger International Bhd inked a 10-year lease agreements for two of its commercial buildings in Ganzhou City, Jiangxi Province, China with an initial rental income of about RM11.1 million per year.
Managing director and deputy chairman, Leng Xingmin said the lease agreements with parties of strong financial standing and operating track record were subject to scheduled rent increases.
“This represents a milestone achievement in our plan to forge a stable, recurring income stream for the group, to fuel our growth and expansion going forward,” he said in a statement today.
The commercial buildings comprise a purpose-built six-storey one-stop “AutoCity” building with a net lettable area (NLA) of 493,062 square feet (sq ft) and a 19-storey hotel with 190,715 sq ft of NLA, both owned by Kanger’s indirect wholly-owned subsidiary, Ganzhou Kanger Industrial Co Ltd.
The group said its AutoCity building will be rented to Ganzhou Jiache Automobile Trading Co Ltd commencing April 1, 2020 for RM8.0 million a year, while the hotel will be leased to Ganzhou Fuying Kaili Hotel Management Co Ltd beginning May 1, 2020 for RM3.1 million a year.
Other than applicable property taxes and salaries for a few staff members, Kanger said all other routine property management and maintenance expenses will be borne by the tenants.
As such, it said a large proportion of the future lease income, starting at approximately RM11.1 million per annum was expected to contribute directly to the group’s bottom line.
Leng said the group is believed to be in a strong position to enjoy potential capital gains in terms of market value appreciation over the long term.
“With the Chinese Government’s stated policy of developing inwards away from coastal cities and of transforming Ganzhou from an industrial zone into a commercial and technological hub in the likes of Shenzhen and Hangzhou, we expect more and more investments and developments to flow into this area,” he added.
TAGS : Kanger International, lease agreement, China, Leng Xingmin, AutoCity, hotel