Skyframe selling stake to raise funds

PUBLISHED : Wednesday, 28 May, 2008, 12:00am
UPDATED : Wednesday, 28 May, 2008, 12:00am

Small developer Skyframe Realty (Holdings) is in talks to sell a strategic stake in two serviced apartment blocks it proposes to build in Guangzhou's Tianhe district with a selling price of about 10,000 yuan (HK$11,250) per square metre, according to property consultants.

The proposed sale comes at a time when the company has cash on hand of just 200 million yuan but has a number of projects to develop.

The 53-storey and 45-storey hotel-style serviced apartment blocks will be built on a 7,217 square metre site. It will also have a six-storey underground shopping centre.

The development attracted the attention of a number of investment funds at the time it was announced, including British-based Grosvenor and United States investment bank JP Morgan, sources said. But no deal has yet been reached.

'The proposed sale is in preparation for business development in 2009 to 2010. The company has sufficient cash for this year's budget,' a source said. It has already agreed to sell six floors of its completed office project Skyfame Tower - adjacent to the proposed apartment blocks - for 230 million yuan, which translates into a price per square metre of 26,000 yuan.

This year, Skyframe would need about 100 million yuan to develop the first phase of its 55 per cent-owned residential project in Guiyang, group financial controller Julia Cheung said earlier. The total investment cost of the project is estimated at 1.6 billion yuan, including land cost of 550 million yuan.

The company is also poised to develop its biggest project in Zhoutouzui in Guangzhou, which will include six high-rise luxury apartment towers and two serviced apartment blocks and 1,000 parking spaces.

Fund managers say they are now finding more buying opportunities in southern China as the slowing property market and banks' tightened lending have forced developers to sell equity stakes in their developments.

Meanwhile, US-based Angelo, Gordon is about to buy a stake in a residential project in Guangzhou's Nansha district from Newsun Group. The latter's chairman, Liang Ruihu, declined to comment on the sale.