Kingboard sells stake in Shenzhen property project after spending big on London office tower
The Hong Kong company expects a profit of around US$269 million from sale of stake to its partner in the project, Shimao Property
Kingboard Chemical Holdings has agreed to sell a stake in a Shenzhen commercial property project for 3.2 billion yuan (US$483 million), its second asset sale in a month and three days after it splashed out to buy a London office tower.
The Hong Kong-based industrial firm and property developer expects to book a 1.78 billion yuan gain from the sale of a 49 per cent stake in the project to its joint venture partner Shimao Property, which owns the remaining 51 per cent through Shanghai-listed subsidiary Shanghai Shimao.
The sale “represents an opportunity to realise the company’s investment in the target company … and enables the group to free up capital for operations and investment purposes when such opportunities arise,” Kingboard said in a filing to Hong Kong’s bourse on Monday.
It did not give details of the project, which is located in Nanshan, western Shenzhen, but said it posted a net loss of HK$6.56 million last year.
Kingboard made HK$800 million in profit from the sale of a 9.6 per cent stake – nearly half of which it accumulated in the past 12 months – in Hong Kong’s flagship carrier Cathay Pacific to Qatar Airways for HK$5.16 billion. Kingboard, which began business in 1988 as a manufacturer of laminates for printed circuit boards, posted net profit of HK$2.18 billion for the first half of 2017.
Last week Kingboard said it would buy 15 Canada Square in Canary Wharf, a major business district in east London, for £400 million from accounting and consulting firm KPMG. The 14-storey building has 430,000 square feet of grade A office space.
Kingboard said in the announcement that it has been searching for “quality properties” to generate “what the board believes to be a stable and reasonable return in the current market conditions.”
KPMG will lease the building for 25 years for an annual rent of £18.13 million, subject to revision in the future.
The deal was the second major London office purchase by Kingboard in 14 months. In October 2016 it bought Moor Place, an 11-storey, grade A office building with 236,793 square feet of floor space in London’s Moorgate area for £271 million.
Kingboard shares closed up 0.1 per cent at HK$40.1 on Monday. They have fallen 17.1 per cent from this year’s highest closing price, but are still 70.6 per cent higher from the start of the year.