Henderson sees $7.5b premium for giant project

PUBLISHED : Thursday, 27 July, 2006, 12:00am
UPDATED : Thursday, 27 July, 2006, 12:00am

Henderson Land Development expects to pay $7.5 billion in land premium to the government for a residential project in Ma On Shan, according to chairman Lee Shau-kee.

The developer is in talks with the Lands Department for modification of the development site's lease, and Mr Lee expects the department to impose a levy of $2,500 per square foot, or a total of $7.5 billion.

The project will be Henderson Land's largest residential development in Hong Kong. It comprises 23 residential blocks that provide more than 3,600 units with a total gross floor area of 3.4 million square feet.

Henderson Land yesterday signed a $13.35 billion syndicated bank loan, the largest loan denominated in Hong Kong dollar. The five-year revolving credit facility will be provided by 24 lenders.

'The money will be used for Hong Kong and mainland property development projects,' Mr Lee said. 'We will spend it based on market sentiment and potential return. We will definitely invest more on high-return projects.'

Mr Lee said the central government's recent measures to curb growth in the overheating property market would not affect the company but instead benefit the market in the long run as they would reduce speculation.

Meanwhile, Henderson Land may relaunch its real estate investment trust in the fourth quarter. It delayed the US$500 million initial public offering of Sunlight Reit last month amid fading investor interest in reits.

'We will consider relaunching the offering if the US interest-rate cycle comes to an end next month,' Mr Lee said. 'It would save costs to relaunch when US interest rates become stable.'

Sunlight, which consists of 20 grade B office and retail properties in districts such as Mongkok, Sheung Wan, Tseung Kwan O, Wan Chai and Tsim Sha Tsui, is owned by Henderson and Shau Kee Financial Enterprises.

It has a portfolio valued at $9.2 billion, including the Metro City Phase I arcade in Tseung Kwan O.