China Xintiandi to speed up sale of non-core assets
The mainland arm of Shui On Land is planning to make improvements to key properties in order to boost rental income
China Xintiandi, the mainland commercial property arm of Shui On Land, will speed up the sale of non-core properties and enhance assets to bolster its income in preparation for a planned spin-off once market sentiment improves.
"We will gear up our effort to enhance rental income to increase the appeal for investors," said Philip Wong Kun-to, who became chief executive in July.
With a portfolio of office, retail and hotel properties worth 28 billion yuan (HK$35.5 billion), Wong conceded that the company's annual rental income of 1 billion yuan was low.
An additional 14 billion yuan worth of commercial properties totalling as much as 800,000 square metres was under construction, he said.
Other properties were not achieving their full potential. For example, Pacific Department Store, located at its Shui On Plaza headquarters, was locked up in a 20-year lease due to expire in 2017. "The space will definitely achieve three or four times higher than what the department store is paying now once the lease expires," he said.
Low rental income has forced the firm to sell non-core assets to fill the earning gap.