HK Ferry in $1.5b Tai Kok Tsui deal
Hong Kong Ferry has entered into a $1.5 billion property development agreement with Henderson Land for the redevelopment of its Tai Kok Tsui waterfront site into a residential and commercial complex.
Under the agreement, Hong Kong Ferry's property-development arm, Lenfield, will receive $1.5 billion from two of Henderson Land's wholly owned subsidiaries. Hong Kong Ferry is 30 per cent-controlled by Henderson Investment, a subsidiary of Henderson Land.
Henderson Land has also agreed to a stand-by loan to Lenfield for up to 50 per cent of the cost of the development, subject to a ceiling of $1.1 billion.
In return, Henderson Land will be entitled to 50 per cent of the sales proceeds from the 'domestic portion' of the development.
Nancy Leung, for Hong Kong Ferry said: 'The proceeds will come from the sale of the newly built residential and commercial units, including carparks. The proceeds will be split 50 per cent.' The agreement also stipulates that Heng Tat, a wholly owned subsidiary of Henderson Land, will be engaged as the main contractor of the project.
Hong Kong Ferry will pay Heng Tat for the prime costs of all of the works including subcontracted works. The construction costs for the superstructure of the development were estimated to be about $2 billion.
Hong Kong Ferry said it would use the $1.5 billion from Henderson to repay bank loans and for general working capital. It estimated the profit which it would reap from the consideration payable by Henderson Land would be $520 million.
Hong Kong Ferry paid $2.03 billion for the land premium to convert its former shipyard site in Tai Kok Tsui into residential and commercial use, bringing the total investment cost of the project to about $5 billion.
The redevelopment will have 3,288 units of about 500 square feet each or a gross floor area of 1.72 million sq ft. It will also include 324,000 sq ft of commercial space, a hotel and 1,100 car-park spaces. The development is scheduled for completion in 2003.