• Tue
  • Dec 23, 2014
  • Updated: 12:33pm

Tower sale to boost Everbright resources in China

PUBLISHED : Saturday, 15 April, 2006, 12:00am
UPDATED : Saturday, 15 April, 2006, 12:00am
 

China Everbright International plans to sell one of its office buildings to Citic Ka Wah Bank for $122.1 million and use the proceeds to develop its environmental protection business in China.


The mainland-focused infrastructure company yesterday said the disposal of Lippo Centre would generate net proceeds of about $67.6 million, with an estimated gain of $16 million expected from the sale.


'The group has been focusing on the environmental protection business since 2002. The sale of the property would enable [it] to consolidate its resources in development in China,' it said.


After the disposal, China Everbright International will have two other properties in Hong Kong.


Although half its revenue last year came from infrastructure investment, this year the company plans to boost capital expenditure on its environmental protection business fivefold to $1 billion due to rapid growth.


Lippo Centre contributed net profits of about $2.56 million in 2004 and $2.79 million last year to the company.


Rentals for grade A offices rose 9.8 per cent across the city, according to property consultant Savills, as strong demand from financial institutions pushed up office rents in Central to a high of more than $100 per square foot, and industry players said the current office space supply crunch would continue to drive up rents.


Grade A office supply hit a 35-year low last year, with only 322,900 square feet completed, official figures show.


Morgan Stanley analyst Kenny Tse Chiu-ping said he expected there would be no new office supply in Central until 2010.


In view of this, companies are hedging against the expected rise in rental costs by buying property.


Standard Chartered, for example, is also shopping for premises so that it can move more of its branches into owner-occupied space. The lender, which bought 11 properties in just over a year, said that leasing its branches would allow clearer predictions on costs since property and staff expenses were its greatest outlays.


Chief executive Peter Sullivan expected that rentals on its leased outlets, which numbered 63 branches, would continue to rise.


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