China Star gains up to 20pc upon land deal

Shares in Macau casino investor China Star Entertainment rose as much as 20 per cent yesterday after it agreed to pay HK$550 million cash to Stanley Ho Hung-sun's private Sociedade de Turismo e Diversoes de Macau (STDM) for rights to develop four residential sites in Macau.

China Star, controlled by entertainment mogul and VIP gambling junket investor Charles Heung Wah-keung, said the four sites were independently valued at HK$1.09 billion.

The Macau government granted STDM rights to the sites between 1989 and 1994, when the firm now controlled by Ho, the Fok Ying Tung Foundation, New World Development chairman Cheng Yu-tung and others was still Macau's monopoly casino operator.

STDM, now the controlling shareholder of casino operator SJM Holdings, failed to develop the sites in accordance with the deadlines set in the original land grants, which lapsed more than a decade ago. But China Star said the government had agreed to extend the deadline for the land to be developed to April 2013.

The sites, zoned for residential construction of a combined 60,000 square metres, are located on the Macau peninsula near the Polytechnic Institute and Lotus Square, in the area near China Star's 50 per cent owned Lan Kwai Fong casino hotel.

However, because the four sites are near the historic Guia Lighthouse, the height of any new buildings will be subject to a 2008 Macau government order designed to preserve views of the lighthouse.

As a result, 'the final approved constructional floor areas of the sites will differ from those [60,000-plus sq metres],' China Star said.