A Day Visit to EC World REIT's Properties

ec world reit reits stocks Nov 04, 2019

by: Jimmy Chai

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EC world REIT is uniquely exposed to China’s ecommerce sector, which has been a fast growing sector in China.

We have the opportunity to visit EC World last month and get to understand a little more about ecommerce logistic.

The properties are located Fuyang, which I came to know, Fuyang was re-zone to be part of Hangzhou, the home of Alibaba. Due to this re-zone, the residential property in Fuyang has generally appreciated nearly 50%. This is from the driver who drove us from Hangzhou city centre to Fuyang town.

The first stop was Ruyicang (如意倉), held by Hangzhou Fuyang Yunton E-commerce company. Ruyicang service reputable e-commerce platform – Taobao and JD.com.

A bright signboard with Ruyicang on it. Further down the aisle, is the control center. An impressive real time parcel monitoring system. It shows the numbers of online orders, the number of parcels and the accumulate number of parcels.

Muiti-screens showing the various activities in various warehouse in real time. The control center monitors activities and ensure smooth operation within the warehouses.

The company milestones. Integrated service via various ecommerce platform. They are going green with recycle boxes

One of the semi-automated warehouses where all the goods are stores. Parcel are guaranteed to ship to Hangzhou distribution centre within 24 hours and the buyers can receive their merchandise the following day.

Building a full automated warehouse. See the shelf is closed to one another to maximise space

2nd stop is Hengde Property. This property only serves 2 tenants. Both are tobacco companies. The warehouse is used to age tobacco number of years before making into cigarettes. The warehouse provides regular QC and simple tobacco leaves cutting at tenants’ request too.

3rd stop is the port logistic, Chongxian Port logistic. There are a list of tenants from the steels industry. The steel company dock their ship, unload them and store in their warehouse or open space. The steel is to distribute to the Zhejiang area.

There are 2 types of tenants. One that rent only space and the tenants build their own crane and the maintain the warehouse. The other is to rent the space and the facility

The final stop is the E-commerce logistic, Bei Gang logistic. The area is the small community or county on its own. It has offices, shops, cinemas, KTV, residential area. It is also where sellers can setup their office in the properties to for online-offline retail outlets.

We visit one of the building and we saw rows of mini-studio where sellers can lease them to do streaming to Tik-Tok, Taobao, Meitu, Tianmao, Meipai and many more. This is the digital age of marketing in China.

It is an one day trip to visit 4 of EC World properties. A learning journey seeing how ecommerce has transformed China retail scene and the consumer quick to adapt to those changes. Through the conversation with the manager, the ecommerce platforms continue to push such changes to be more efficient by using robotic and AI technology. Their aim is to deliver the parcel to customer within hours after placing online orders; enhancing buyers’ experience.

Live streaming is the new digital marketing and there are about 200 streaming sites in China. It is similar to Home Shopping channel in old economy. More merchandisers are using influcers to livestream to sell product online. Although EC World only deal with master lease, we shall see if EC World Bai Gang is able to grow this pool of tenants and become a important hub for O2O business.

It is worth mentioning that the property has 1% rental escalation on 1st Jan 2019 and 2020, another 1% from Nov 2020 to Oct 2024, which contribute to the revenue that distributed as DPU.

Real Estate Investment Trusts (REITs) are one of the most reliable way to invest as they generate steady and consistent tax free cash flow. REITs also open up access for investors to participate in a diverse range of real estate assets with low capital outlay. By having and applying the right investment toolkit at your disposal could potentially boost your investment performance many folds and/or help you reduce your REITs investment risk.

In the upcoming The Essential REITs Toolkit Webinar, we will be covering:

  • Part 1: Understanding REITs
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  • Part 3: Sector Toolkit for REIT Investing
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  • Part 5: Q&A

Some key highlights that will be covered includes:

  • Why the traditional triple-constraint filter of high yield, low price-to-book ratio (P/B ratio), and low gearing typicaly ends up filtering sub-par REITs
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  • Case studies of REITs which are considered high quality
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To register for the The Essential REITs Toolkit Webinar, click on the banner below:

Meanwhile, do also check out the book REITs to Riches: Everything You Need to Know About Investing Profitably In REITs available at all major bookstores around Malaysia and Singapore. To purchase the eBook (PDF) copy, navigate to http://aktive.com.sg/store/reits-to-riches/.


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