Shui On unit calls off property deal

PUBLISHED : Thursday, 23 October, 2008, 12:00am
UPDATED : Thursday, 23 October, 2008, 12:00am

China Central Properties, a listed investment unit of Shui On Construction and Materials, has cancelled the 1.38 billion yuan (HK$1.57 billion) purchase of a distressed building in central Guangzhou, according to sources.

China Central, which buys and sells distressed properties, entered into an agreement to acquire Guangzhou Dapeng International Plaza in Yuexiu district in April.

The sources said the deal was called off largely because of difficulties in getting financing.

A Shui On spokeswoman said there was a likelihood that the deal would not be completed.

She said the company's interim report had indicated that certain conditions must be met before the deal could be completed but that these had not been fulfilled by the vendor.

The 51-storey plaza is on top of a retail podium and is next to the Guangzhou Garden Hotel in the heart of the city.

The original plan was to convert the building to a grade A composite complex of 129,000 square metres in the second half of 2010.

The collapse of the deal comes amid heavy selling pressure in the shares of Shui On, controlled by Vincent Lo Hong-sui.

The stock dropped to a 52-week low to HK$5.32 at one point before closing at HK$5.48 yesterday, down 12.32 per cent from Tuesday.