Revaluation loss hits Chinese Estates Holdings

PUBLISHED : Thursday, 24 March, 2011, 12:00am
UPDATED : Thursday, 24 March, 2011, 12:00am

Chinese Estates Holdings booked a big property revaluation loss last year, leading to a net loss of HK$8.86 billion during the period.

The real estate investment holding company said it wrote the fair value of its investment properties down by HK$10.83 billion as at December 31 following a revaluation of its property portfolio, compared with a valuation gain of HK$8.61 billion recorded in 2009.

The big write-down followed the sale by the company of various retail properties and shopping malls in Causeway Bay and Wan Chai to chairman Joseph Lau Luen-hung last year, at a time when retail rents were rising and the market outlook was positive.

The resulting net loss of HK$8.86 billion for last year followed a net profit of HK$10.02 billion in 2009.

Excluding the property revaluation loss, underlying profit grew 33.4 per cent from HK$1.42 billion to HK$1.89 billion. Revenue was up 24.2 per cent to HK$2.67 billion.

The developer recognised a profit of HK$408.9 million from property sales last year, 389 per cent more than the HK$83.6 million in the previous year. The profit was generated from the sales of MOD 595 in Mong Kok, i-home in Tai Kok Tsui, phase one of Splendid City in Chengdu and York Place in Wan Chai.

Its flats in phase one of The Metropolis in Chengdu and joint-venture project The Hermitage in Hong Kong were pre-sold last year and a 25 per cent interest in The Hermitage generated revenue of HK$2.87 billion from the pre-sale.

The revenue is expected to be recognised in the first half of this year. The company has so far generated 114.7 million yuan (HK$135.2 million) from pre-sales, which will be booked in late 2012.

Its joint-venture project at Hoi Wang Road in West Kowloon is scheduled for launch in the first half of this year.

The project comprises six residential towers comprising 740 flats and retail properties with a total floor area of 650,600 square feet. It will be completed in the middle of next year.

Rental income from retail properties grew 17.9 per cent to HK$761.2 million, while the income from non-retail properties was unchanged at HK$365.1 million.

Occupancy rate of its retail properties was 88.11 per cent last year, excluding the floor area under renovation.

Its new shopping mall, The One in Tsim Sha Tsui, opened in October last year and its occupancy reached 95 per cent by the end of the year.

The company declared a final dividend of one HK cent a share, same as previously.

Last year, in addition to the ordinary dividend, it declared a special dividend of 99 HK cents a share.

Taking a knock

Chinese Estates Holdings suffered a net loss of this amount, in Hong Kong dollars, last year: $8.9b