Singapore, 22 February 2021 – City Developments Limited (CDL) confirmed yesterday that it has entered into agreements to acquire from Sincere Property Group, its joint venture investment in China, and two entities of China Ping An. These equity interests will accord the Singapore real estate conglomerate a combined 55 per cent effective interest in a Shenzhen technology park.
This is CDL’s first major corporate action since forming a special working group to improve liquidity of Sincere Property. It acquired from the three entities a total of 84.6 per cent equity interest in Shenzhen Tusincere Technology Park Development Co Ltd for RMB850 million (approximately S$174 million) and will assume existing shareholders’ loan proportionately. Sincere Property will continue to hold the balance 15.4 per cent equity interest in the Holdco.
Holdco controls 65 per cent equity interest in Shenzhen Longgang Tusincere Tech Park project, which has been valued at RMB8.8 billion (approximately S$1,805 million) by independent valuer, Cushman and Wakefield. The remaining 35 per cent equity interest of the project is held by Shenzhen Longgang District state-owned enterprise.
Spanning 192,739 square metres, the project has a total saleable gross floor area (GFA) of 413,634 square metres plus a self-held office block with GFA of 162,144 square metres. It comprises offices, SOHO apartments, car park lots and retail/others at about 70, 20 and 10 per cent respectively.
The site was acquired in 2015 and developed in four phases. Phase 1 is completed. Phases 2 and 3 are currently under construction and are expected to be completed in April 2022. Phase 4 has yet to commence construction. As of 31 December 2020, the area pre-sold from the first three phases stood at 224,933 square metres, with total sales proceeds of RMB7.2 billion (approximately S$1,477 million).
Since its establishment as a Special Economic Zone 40 years ago, Shenzhen has become a major engine of the Pearl River Delta and Greater Bay Area. With a population of about 20 million people in the greater metropolitan area, Shenzhen is also one of the fastest-growing real estate markets in the country.
This asset acquisition will reduce the gearing of Sincere Property, which has faced liquidity issues since the onset of the COVID-19 pandemic, and tighter rules imposed by China related to borrowings of real estate developers. The operating and regulatory environment in China has been evolving rapidly since the Group invested in Sincere Property in April 2020.
Kwek Leng Beng, CDL Executive Chairman, said, “In executing this asset acquisition, the CDL working group is accelerating efforts to implement the restructuring of Sincere Property. Our focus is to improve liquidity while limiting any additional financial exposure by CDL to the investment in Sincere Property.”
– Construction+ Online
Source: CDL
