Keppel unit buys 2nd property in China's 'Silicon Valley' for $35.1m

SINGAPORE - Keppel Land China is buying another completed commercial property in Beijing's Haidan district through its acquisition of Beijing Shunxiangren Enterprise Management Co for around 178.6 million yuan ($35.1 million).

The property is Shangdi Neo, a five-storey development indirectly owned by Beijing Shunxiangren, Keppel Corp said on Monday (Sept 2) in a regulatory announcement.

Shangdi Neo is located in Shangdi Information Industry Park, which is part of the expanded Zhongguancun in the Haidian district of Beijing, also known as China's Silicon Valley. It offers about 4,241 sq m of net leasable area, and will be fully occupied by sole tenant Distrii, an operator of smart, modern working spaces in China and Singapore. This is upon completion of upgrading works.

The property's acquisition will see Keppel Land China's subsidiary Beijing Keppel Hong Hui Management Co entering an equity transfer agreement with vendors Ningbo Jiasheng Yuecheng Investment Management Center (LP) and Beijing Hanhe Investment Management Co, which respectively own 99 per cent and 1 per cent of Beijing Shunxiangren.

Subject to completion adjustments, around 20.9 million yuan will be paid to the vendors for the 100 per cent equity acquisition of Beijing Shunxiangren. This amount will be paid in two tranches, with the final payment expected to take place in the fourth quarter of 2019.

The remaining sum of about 157.7 million yuan will be extended as a loan to Beijing Shunxiangren to repay its outstanding debts.

Keppel Corporation said the transaction is not expected to have a material impact on its net tangible assets per share or earnings per share for the current financial year.

Keppel Land China president Ben Lee said the company will continue its strategy to grow its commercial portfolio in China, with a focus on high-growth cities such as Beijing.

"With the low vacancy rate of offices in Zhongguancun, which stood at 1.5 per cept as at end-2018, coupled with rapid growth of the technology sector, we are confident that our commercial development will meet the strong demand for quality office space in the Zhongguancun area," Mr Lee said.

Keppel Land China spent 555 million yuan in end-December 2018 to acquire a completed commercial property located in the Haidian district. The property comprises nine storeys of office space covering 8,532 sq m of gross floor area, two storeys of retail space (2,104 sq m of gross floor area) and 23 car park spaces (992 sq m of gross floor area).

Keppel Corp shares last closed on Friday at $5.84, up four cents or 0.69 per cent.