Lippo China plans sell-off

PUBLISHED : Wednesday, 14 October, 1998, 12:00am
UPDATED : Wednesday, 14 October, 1998, 12:00am

Lippo China Resources has its sights set on raising between $250 million and $300 million in cash from the sale of 10 luxury residential properties in Repulse Bay and two office floors in the Lippo Centre in Admiralty.

However, the company denied it was conducting the sale because it was facing financial difficulties.

Instead, it was selling off older assets and looking to reinvest in the market when the right opportunity presented itself.

Lippo China director Jonathan Foxall also denied the company was trying to extricate itself from the local property market because of the market's deterioration.

'Nothing has changed,' he said. 'We still have a small stake in Tung Chung and a 50 per cent stake in Hammer Hill, and a small site in Happy Valley.

'These are projects on which we are moving ahead,' he said.

In the past two weeks, the company has raised about $68 million from the sale of five luxury flats in Celestial Garden on the south side of Hong Kong Island.

The company also confirmed it had put on the market two floors in the Lippo Centre - the 34th and the 39th - at $5,500 to $6,000 per square foot.

Some property analysts questioned whether the company might be selling the assets to raise cash following the failed attempt by China Resources Enterprise to buy Lippo China's 50 per cent stake in HKCB Bank Holding.

However, Mr Foxall denied the two events were connected.

He said Lippo China was simply selling off mature properties which could add a little more value to its income stream.

'We are selling investments where we have a healthy profit locked in,' he said.

Mr Foxall said the sale would also help the company reduce its gearing, which was already low. It was premature to say whether the sales proceeds would be used to buy land at government auction.

'We'll have the cash waiting for the appropriate moment, whether it is the land auction, or private sales, or whatever,' he said.

If all the luxury flats were sold, FPD Realty, which is handling the luxury sale, estimated that Lippo China would recoup more than $125 million on the residential properties.

Property agents said the company might have to come down slightly on its asking price if it wanted to find buyers for the entire two floors in the Lippo Centre.

Some agents suggested Lippo China might want to sell the two floors because office prices were likely to continue to fall.

Mr Foxall stopped short of saying Lippo China was selling its assets because of a possible further deterioration in residential and office prices.

'It is a volatile situation with all of the signs pointing to a further correction,' he said. 'Some say they think the market is near the bottom. Everybody has to make up their own mind about the property market.'