Kerry Properties

Kerry sells property stakes for HK$2b in mainland asset shuffle

PUBLISHED : Friday, 07 December, 2007, 12:00am
UPDATED : Friday, 07 December, 2007, 12:00am

Kerry Properties has agreed to sell stakes in seven mainland projects to Kerry Holdings and Allgreen Properties for almost HK$2 billion as part of its portfolio restructuring in the market.

Kerry Properties also said it would invest as much as HK$19.1 billion in those projects. Investment would increase to up to HK$26.5 billion if stake sales to Allgreen failed, it added.

Kerry Holdings, the developer's parent that also controls the publisher of the South China Morning Post, will pay HK$842.5 million for the stakes.

For its part, Singapore-listed Allgreen will pay HK$1.02 billion. Kerry Properties expects to book a profit of HK$112 million from the deals.

'The scales of property projects in the [mainland] are getting increasingly larger and require ever greater financial commitment from the developers,' Kerry Properties said.

'In order to maximise the utilisation of the group's financial resources, the directors have always intended to co-develop its property interests in the [mainland] with friendly parties.'

Kerry Properties' shares in the projects, which are located in Hangzhou, Chengdu, Qinghuangdao and Shenyang will fall to between 40 and 80 per cent after the transactions. The projects can yield gross floor area of 634,982.3 square metres.

The company's chairman Ang Keng Lam said in mid-September that it would further the focus on the mainland as rising income and urbanisation is fuelling accelerating demand.

Apart from Hangzhou, Qinghuangdao, Chengdu and Shenyang, Kerry Properties also has investments in Shanghai, Shenzhen and Tianjin, and in Zhejiang, Jiangsu and Fujian provinces.

As of mid-September, the mainland accounted for 48 per cent of its assets and 85 per cent of its land bank, Mr Ang said.

Kerry Properties and other Hong Kong-listed developers are making an aggressive push in the mainland to tap rising home demand and prices.

Wharf (Holdings) yesterday said it formed a 50-50 joint venture with China Merchants Property Development to buy a residential site in Nanjing for 2.41 billion yuan.

The two companies bought the 3.58 million square foot site in Xianlin district at a public auction yesterday with a bid that was 60.7 per cent higher than the opening bid of 1.5 billion yuan.

Shares in Kerry Properties closed at HK$69 yesterday, up 0.29 per cent before the announcement. The stock has risen 89.82 per cent this year, beating the 67.94 per cent gain in the Hang Seng Property Index.

Friendly parties

Kerry is focusing on co-developing its properties on the mainland

The amount Kerry Properties plans to invest on mainland projects, in HK$: $19.1b