Hong Kong’s Shui On buys two Shanghai office towers despite earlier disposals
The company says it won a tender to buy two office buildings for US$173m on the same day it announced the disposal of prime Shanghai assets for US$630m
The deal reflects the company’s commitment to office development in prime locations despite the disposals of major property assets in China to reduce debt.
The company won the tender, which closed on Tuesday, to buy the Jianfa Junyi buildings in Yangpu district in the northeastern section of downtown Shanghai, it said in a filing to Hong Kong’s stock exchange on Wednesday.
“With the geographical proximity of the property to the KIC project of the company, the acquisition expands and strengthens the KIC brand, and increases our office portfolio in this upcoming and maturing office sub-market in Shanghai,” the company said.
KIC refers to the “Knowledge and Innovation Community” project in Yangpu, a bundle of properties comprising retail, office, hotel, car park spaces and a clubhouse.
“It also fits well into our new long-term strategy in expanding the company’s presence in the Shanghai office market,” it added.
The Jianfa buildings have a total saleable gross floor area of 45,298 square metres. Construction was completed in September this year and final inspection of the buildings are expected to be finished by the end of the year.
Shui Oi said it had paid 220 million yuan to the Shanghai United Assets and Equity Exchange through which the Jianfa Junyi buildings were sold, forming part of the first instalment payment for the purchase.
It also fits well into our new long-term strategy in expanding the company’s presence in the Shanghai office market
The property developer founded by tycoon Vincent Lo Hong-sui said the bid price was largely based on values of “comparable properties within comparable vicinity and physical specifications”.
The seller is the Fujian province-based, state-backed property-focused conglomerate C&D Real Estate Corp.
Shui On struck a deal on Tuesday to sell almost half its stake in a portfolio of prime mixed-use properties in its Ruihong Xincheng project in Shanghai to China Life Insurance for 4.16 billion yuan, which is expected to result in a gain of 1.2 billion yuan.
It said the sale was to “optimise the value of some of its mature investment properties and to recycle its capital into other new opportunities”.
The company also sold to China Life in October, a 49 per cent stake in KIC for 2.95 billion yuan.
Earlier in May this year, it sold a 79.2 per cent interest in Chongqing Tiandi to China Vanke, the nation’s second-largest developer, for 4.1 billion yuan, reaping a gain of 1.7 billion yuan.
