Sino-Ocean Land buys Qingdao firm for 2.15b yuan

PUBLISHED : Monday, 29 October, 2007, 12:00am
UPDATED : Monday, 29 October, 2007, 12:00am

Sino-Ocean Land Holdings has sealed a 2.15 billion yuan deal to buy a property firm in Qingdao in Shandong province, just a month after its listing, as part of the Beijing-based property developer's strategy to expand into other high-growth areas in the mainland.

The property unit of the country's biggest shipping company, which raised HK$13.7 billion in an initial public offering last month, signed an agreement to buy the entire stake in Qingdao Yizhong Real Estate, a leading property developer in the coastal city, it said yesterday.

Yizhong, which primarily engages in the development of medium to high-end properties in Qingdao city, has a land bank of 1.18 million square metres in gross floor area.

As of last month, Yizhong has completed projects with an aggregate gross floor area of 360,000 square metres and has seven projects at various stages of development.

Yizhong posted pre-tax profit of 50 million yuan last year and 17 million yuan for the first nine months this year. 'The acquisition represents an important opportunity to pursue our strategy to further expand into other high-growth areas across the mainland and to replicate the success we have achieved in Beijing,' chairman Luo Dongjiang said.

Mr Luo said the acquisition would significantly enhance the company's development in Qingdao and Shandong, the key city and province in the fast-growing pan-Bohai Rim region. Yizhong had land parcels and projects at conveniently located sites suitable for residential developments and prime locations for office and retail projects and also large-scale land parcels suitable for integrated developments which could improve and supplement the company's existing land reserves, he added.

Meanwhile, Sino-Ocean also agreed to provide Yizhong a shareholder loan of 950 million yuan on or before next month as working capital after completion of the acquisition. Sino-Ocean, a venture of Cosco International, the Hong Kong-listed property unit of shipping giant Cosco Group and chemical conglomerate Sinochem (Hong Kong), had said it would use the initial public offering proceeds to develop its land bank.

The company, which specialises in medium and high-end developments, has land reserves of 8.5 million square metres of gross floor, mainly in Beijing, Tianjin, Dalian and Shenyang.