Swire Pacific says its wholly-owned subsidiary is in talks to sell a 'significant' property asset that could lead to a disclosable transaction under listing rules.
The announcement was released after Sing Tao Daily reported that Singapore's Mapletree Investments is in talks to buy Swire's Festival Walk centre in Kowloon Tong, involving HK$22 billion.
Swire Pacific said yesterday that Swire Properties 'is in discussions which could lead to the disposal of a significant investment property asset'. If the talks lead to an agreement, it will be a disclosable transaction, it said.
A spokeswoman for Swire Properties declined to identify the property and also declined to comment on the news report.
Festival Walk, which opened in 1998, comprises 980,089 square feet of shopping space and 228,665 square feet of offices.
An independent valuation of the retail arcade as of March 3, 2010 came in at HK$14.45 billion, while the office portion was valued at HK$1.45 billion, according to information Swire Properties provided to Hong Kong Exchanges and Clearing last April.
Swire Pacific planned a HK$20.84 billion initial public offering for Swire Properties, but last May called it off because of a downturn in market sentiment.
The Festival Walk development was jointly built by Swire and Citic Pacific at a cost of HK$5 billion. The two companies paid HK$2.85 billion for the site at a government land auction in 1993.
Swire owns 100 per cent of the property since it bought the 50 per cent stake from Citic Pacific for HK$6.18 billion in January 2006.
Swire Pacific, which also owns Pacific Place mall in Admiralty and Cityplaza mall in Taikoo Shing, had studied a spin-off of Festival Walk shopping mall into a real estate investment trust in 2007, but no plan was finalised.
Charles Chan Chiu-kwok, managing director at Savills Valuation and Professional Services, said strong liquidity and low interest rates have encouraged foreign capital flowing into Hong Kong to buy hard assets.
Mapletree Investments is a unit of Temasek Holdings, Singapore's state-owned investment company.