World Trade Centre sale caps week of speculation

Chris Chapel

THE announcement on Saturday of the sale of the World Trade Centre to Sun Hung Kai Properties for $2.21 billion capped a week of intense speculation as to the potential buyer's identity.

Shares in the vendor, World Trade Centre Group (WTCG), rose 11 cents to $1 on Friday in the day's highest percentage rise.

For WTCG, the sale means a book profit before expenses of $363 million but the loss of most of its recurrent income in the form of rent.

The profit from the sale represents about 20 cents a share to WTCG, but the sale price was below market expectations and the stock is already approaching its 1992 high of $1.20.

There is also the question of the company's future operations without its main asset.

On Saturday, WTCG general manager David Lee said the company would satisfy the regulators that it would not be a cash shell.

Mr Lee suggested that much of the cash from the sale of the prime Hongkong property would be ploughed into China property and manufacturing investments.

Investors will be hoping it has more luck in its dealings on the mainland than it had in Hongkong last year.

Then, WTCG announced the $2.5 billion sale of its main asset to a mainland consortium, Resourceful River, only to reveal a short time later that the buyer had been unable to come up with the required $50 million deposit.

The deal just completed is priced at about $4,060 a square foot of gross floor area, compared with the estimated $4,587 a square foot in the earlier, aborted deal.

There is the chance of WTCG sharing in Sun Hung Kai profits from the sale of office units in the building, but only if the sales price exceeds $4,500 a square foot - about 10 per cent above the rate at which the property has just changed hands. - CHRIS CHAPEL