China Merchants Commercial REIT (01503) released its six-month interim results ending on June 30, 2024, with a profit of 2 billion yuan (RMB, same below)....
According to the announcement, during the reporting period, the occupancy rate of the overall property portfolio rose from 86.8% to 92.7%, an increase of 5.9 percentage points from December 31, 2023. The main reason is that after the renovation and upgrading of Huayuan City, new tenants including block orders of the main stores have moved in, increasing the occupancy rate by 11.3 percentage points. The average occupancy rate of office buildings has steadily increased to 94.7% by adopting the "price-for-quantity" strategy, with an increase of 4.7 percentage points. The current rent of both Grade A office buildings has dropped greatly under this strategy. In order to improve the occupancy rate, the company has given many incentives in the negotiation of lease renewals and expansions. At the same time, in order to attract new tenants to enter Huayuan City as soon as possible after the renovation and upgrading to restore the occupancy rate, the company has also given a large rent concession, resulting in a significant decrease in current rental rates.
In this strategy, the rent of office buildings, especially the two Grade A office buildings, has experienced a significant decline. In order to improve the occupancy rate, the company has given many incentives in the negotiation of renewals and expansions. At the same time, in order to attract new tenants to enter Huayuan City as soon as possible after the renovation and upgrading to restore the occupancy rate, the company has also given a large rent concession, resulting in a significant decrease in current rental rates.
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