Shui On Land

Shui On Land optimistic on rental income rise

PUBLISHED : Wednesday, 30 May, 2012, 12:00am
UPDATED : Wednesday, 30 May, 2012, 12:00am


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A day after announcing plans to spin off its Xintiandi unit, Shui On Land said it expected rental income to rise 17 per cent to more than one billion yuan (HK$1.2 billion).

'The increase in rent is mainly because of more projects completed this year,' chief executive Freddy Lee Chun-kong said.

Rental income would be boosted by the completion of 72,000 square metres of investment properties, including Chongqing Tiandi and Foshan Lingnan Tiandi, its annual report said last year.

The proposed spin-off was expected to raise up to US$1.5 billion later this year, bankers familiar with the situation said.

Deutsche Bank, JPMorgan, Standard Chartered and UBS are arranging the transaction.

On Monday, the firm said it would list its premier commercial property unit, China Xintiandi, on the stock exchange to raise capital to fund its acquisitions and expand its portfolio.

China Xintiandi will focus on managing, designing, leasing, marketing, enhancing and redeveloping premium retail, office, entertainment and hotel properties in urban areas on the mainland.

But Lee said details about the proposed spin-off had yet to be finalised.

Shares of Shui On Land, which valued its investment portfolio at 17.98 billion yuan last year, rose 7.31 per cent to close at HK$3.08 yesterday.

The company's first Xintiandi, a large, city-core redevelopment project, opened in 2001 in Shanghai.

The retail entertainment landmark in the city centre drew up to 70,000 visitors per day during the 2010 World Expo in Shanghai and averages 50,000 daily visitors normally.

Shui On subsequently built similar projects in other Chinese cities, including Chongqing and Wuhan.

Last year, the firm said it would spend about eight billion yuan to build Hongqiao Tiandi in Shanghai's next core business district. Lee said the project had received a positive response from potential corporate tenants on the mainland and abroad.

The 380,000 square metre complex comprises a 400-room hotel, 130,000 square metres of retail space and 100,000 square metres of showrooms, offices and an exhibition centre. Completion is scheduled for 2014.

Project director Bryan Chan said Hongqiao Tiandi would be in the heart of a new downtown area linked to the Hongqiao transportation hub's high-speed rail, five metro lines and the future Shanghai Maglev terminal connecting to Pudong International Airport.

'It will be a CBD of the Yangtze River Delta, as it is a unique location for domestic and international corporations setting up their headquarters and offices in Shanghai,' he said.

The Shanghai municipal government sold 10 plots of land last year that will produce a total gross floor area of 1.7 million square metres of commercial space, to build a new CBD. It is part of the city's ambitious drive to become an international finance centre in 2020.

Daily passenger traffic was expected to double to 1.4 million per day when all 10 commercial projects opened in 2015, Chan said.

The city government was also constructing the world's largest exhibition centre, with a gross floor area of 400,000 square metres, adjacent to Shui On's project, he said.

'Within two hours you can fly to Hong Kong, Korea and Japan from Hongqiao,' Chan said. 'Multinationals will also be able to target 75 million people who can reach the centre in one hour by high-speed railway.'