Shui On Land takes on three group projects
With a spin-off planned, the firm has its parent's entire mainland portfolio
Vincent Lo Hong-sui's Shui On Group is injecting the last of its mainland property assets into its flagship China development arm, which it hopes to spin off in a public listing within three years.
Mr Lo will sell the Hualongqiao development in Chongqing, the Chuangzhi Tiandi project in Shanghai and the Xihu Tiandi complex in Hangzhou to Shui On Land for 840 million yuan.
'It is my commitment to Shui On Land shareholders that I will inject assets into the flagship as soon as possible,' he said, adding that the price tag reflected his existing investment in the developments.
The asset reshuffle will double Shui On Land's land bank to more than 71 million square feet. These developments are expected to consume investment capital totalling US$8 billion over the next 10 years.
Shui On Land is 41.04 per cent held by Mr Lo and 20.66 per cent owned by Hong Kong-listed Shui On Construction and Materials (Socam). Institutional investors - including Citigroup, Jebsen and Shanghai Hotel Investments - hold the remaining 38.3 per cent.
Mr Lo, also chairman and chief executive at Shui On Land, said he was not charging a premium for the assets as they were still in the early stages of development and would not contribute revenues until next year.
The Hualongqiao development includes an exhibition centre, luxury hotels and a 398-metre skyscraper. Mr Lo said clearance work on the site, which once was covered by 12,000 homes and dozens of run-down state factories, had been completed. The whole development is expected to be completed in 2014.
Chuangzhi Tiandi is shaping up to be a hi-tech residential and office complex that Mr Lo says will resemble Silicon Valley in California and is scheduled to be completed by 2011.
Xihu Tiandi will be a 58,000 sqmetre retail project and is expected to be open by 2006.
Mr Lo said Shui On Land, which raised US$400 million through the sale of shares to institutional investors early this year, had sufficient capital to undertake the projects. About half of the proceeds had already been drawn, he said.
Shui On Land could also expect to generate more than one billion yuan from property sales and rental activities next year, he said, while any additional project capital required could be raised though bank loans.
Shui On Land's existing assets include the upscale Xin Tiandi, Taipingqiao and Rainbow City projects in Shanghai.
Wilfred Wong Ying-wai, vice-chairman of Shui On Holdings, said Shui On Land would release 700 units at Rainbow City and 80,000 square metres at Chuangzhi Tiandi for sale over the next two years.
Indicative average prices at Rainbow City were now 12,000 yuan per square metre, up 50 per cent from the previous launch, in October last year, he said.
'We signed up 4,400 potential buyers for the first batch of 270 Rainbow City units last Saturday,' said Mr Wong.
Prices for Chuangzhi Tiandi had not yet been finalised, he said.
Mr Lo did not rule out the possibility of Socam, which has a construction subsidiary in Shanghai, participating in Shui On Land's mainland projects.
'Socam can certainly bid for the contracts offered by Shui On Land, if it is interested,' he said.
