Lippo China Resources (LCR), one of the leading office landlords in the Admiralty area, says it is selling some of its holdings to buy land for residential development in urban areas. Last week, it sold the 38th floor of Peregrine Tower for $215 million or $8,100 per square foot to a mainland buyer, and director Jonathan Foxall said it also was subdividing the tower's 37th floor for sale. 'We are starting to look around Hong Kong to make new investments,' he said, denying speculation LCR was selling assets to help bail out its parent company, Lippo Group, in Indonesia. 'The Indonesia operation is looking after itself and the Hong Kong operation is looking after itself. We are different entities,' he said. The decision to sell office floors in Admiralty had been driven by SAR market considerations. Every year for the past five or six years, LCR had sold some office floors to book profits. Mr Foxall said LCR intended to add more balance to its portfolio. It had limited exposure to the residential sector and now was a good time to change that. This had little to do with the recent downturn in the fortunes of the office market and was 'just normal business practice'. 'It's not that we don't have confidence in the office market. I feel that the future of the office market is good,' he said. Prices could just as easily go up as down in the short term. 'If prices did go down further, then we would be wise to sell,' he said. LCR intended to be more aggressive in the next 12 months, submitting tenders and bids for sites at government land auctions in order to acquire urban sites. 'We would look to join other parties on large-scale projects where it would be prudent to spread our risk,' he said. 'On smaller prime sites, we would have the controlling share or a 100 per cent stake.' While the company is best known for its office portfolio in Lippo Tower and Peregrine Tower in Admiralty - where it still owns 10 floors - it also has other commercial assets. It owns several floors in the National Mutual Centre in Wan Chai, which Mr Foxall said it would not sell because of the weak market. It owns the Lippo Protective Tower in Wan Chai, which he said it would continue to lease out. On the residential side, LCR has a few projects on the go, including a 10 per cent stake in Tung Chung Station's second development package, which involves more than two million sq ft of residential space. It has smaller residential developments in Hammer Hill Road at Diamond Hill and a site in Village Road at Happy Valley. Mr Foxall said financing for these residential projects was in order. Proceeds from sale of the two office floors would be used for other projects.
