SINGAPORE (THE BUSINESS TIMES) -Property developer City Developments Limited (CDL) is acquiring a 55 per cent stake in a Shenzhen technology park from its joint venture investment Sincere Property Group and from two entities of China Ping An for RMB 850 million (S$174 million).
This is the developer's "first major corporate action since forming a special working group to improve liquidity of Sincere Property", it said on Monday (Feb 22).
CDL said that it has entered into agreements with the three entities to acquire an 84.6 per cent stake in holding company Shenzhen Tusincere Technology Park Development, and will assume existing shareholders' loan proportionately. Sincere Property will continue to hold the remaining 15.4 per cent in the holding company, which controls a 65 per cent stake in Shenzhen Longgang Tusincere Tech Park. The remaining 35 per cent in the leasehold tech park is owned by a state-owned enterprise, Shenzhen Longgang District.
Real estate consultancy Cushman & Wakefield has valued the tech park at RMB 8.8 billion.
Sincere Property, which has been facing a liquidity crunch owing to the pandemic, as well as tighter rules in China governing financing for real estate developers, will reduce its gearing as a result of the acquisition, CDL said.
CDL executive chairman Kwek Leng Beng said: "In executing this asset acquisition, the CDL working group is accelerating efforts to implement the restructuring of Sincere Property. Our focus is to improve liquidity while limiting any additional financial exposure by CDL to the investment in Sincere Property."
CDL has a 51 per cent per cent stake in Sincere, with its investment to date in the Chinese property group totalling S$1.8 billion.
On Jan 4, the Singapore-based developer announced it was setting up a special working group to explore ways to improve Sincere's liquidity, including through the potential divestment of assets and the restructuring of existing liabilities.
The move came in the wake of a series of senior resignations, starting with former non-executive and non-independent director Kwek Leng Peck, who stepped down after disagreements with the board over the contentious investment in Sincere. Two other independent directors have also resigned.
The tech park, which sits on a site of 192,739 sq m, has a total saleable gross floor area (GFA) of 413,634 sq m, plus a self-held office block with a GFA of 162,144 sq m. Offices take up about 70 per cent of the tech park, which also has commercial-titled, or Soho (small office, home office), apartments (20 per cent), a retail component and nearly 4,900 carpark spaces.
It is situated north-east of Shenzhen City in Longgang district, which is home to high-tech, new technology and new manufacturing enterprises.
Phase one of the park has been completed; phases two and three are ongoing and slated for completion in April next year. Construction of the self-held office block, or phase four, has not begun yet.
As at Dec 31, 2020, the pre-sold area from the first three phases totalled 224,933 sq m, with total sales proceeds of RMB 7.2 billion.