Kanger International Bhd has secured 10-year lease agreements for two of its commercial buildings located within the Ganzhou Economic and Technological Development Zone in Ganzhou city, China.
The company is leasing AutoCity, a purpose-built six-storey building with a net lettable area (NLA) of 493,062 sq ft, and a 19-storey hotel with an NLA of 190,715 sq ft.
The two properties are owned by Kanger's indirect wholly-owned subsidiary Ganzhou Kanger Industrial Co Ltd.
In a filing with Bursa Malaysia, Kanger said the initial rental income per year for the two buildings collectively is RM11.1 million, and is subject to scheduled rent increases.
AutoCity will be leased to Ganzhou Jiache Automobile Trading Co Ltd commencing from April for RM8 million a year.
The hotel will be leased to Ganzhou Fuying Kaili Hotel Management Co Ltd for RM3.1 million a year starting May.
Kanger said, other than applicable property taxes and salaries for a few staff members, all other routine property management and maintenance expenses will be borne by the tenants.
It said as such, a large proportion of the future lease income, starting at about RM11.1 million per annum (and subject to scheduled rent increases) is expected to contribute directly to the group’s bottom line throughout the tenancy period of 10 years.
Kanger's main business is producing bamboo flooring planks for the construction industry. It diversified into property investment and management to reduce the company's sole reliance on its current core business, and generate long term recurring income.