City Developments Limited (CDL) said on Monday that it has entered into agreements to acquire 55% interest in a tech park in Shenzhen, China from Sincere Property Group, its joint venture investment in China, and two entities of China Ping An for RMB 850 million (approximately S$174 million).
CDL said it has acquired from the three entities a total of 84.6% equity interest in Shenzhen Tusincere Technology Park Development Co. Ltd.(Holdco) and will assume existing shareholders’ loan proportionately. Sincere Property will continue to hold the balance 15.4% equity interest in the Holdco.
The Holdco controls 65% equity interest in Shenzhen Longgang Tusincere Tech Park which has been valued at RMB 8.8 billion (approximately S$1,805 million) by independent valuer, Cushman & Wakefield. The remaining 35% equity interest of the Project is held by Shenzhen Longgang District state-owned enterprise.
”This asset acquisition will reduce the gearing of Sincere Property which has faced liquidity issues since the onset of the COVID-19 pandemic and tighter rules imposed by China related to borrowings of real estate developers. The operating and regulatory environment in China has been evolving rapidly since the Group invested in Sincere Property in April 2020,” said CDL in a statement.
“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,” said Kwek Leng Beng, CDL Executive Chairman.
Spanning 192,739 square metres (sqm), the project has a total saleable gross floor area (GFA) of 413,634 sqm plus a self-held office block with GFA 162,144 sqm. The site was acquired in 2015 and comprises offices (about 70%), SOHO apartments (about 20%), 4,887 carpark lots and retail/others (about 10%). The Project is being developed in four phases.
Phase 1 is completed, and Phase 2 and 3 are currently under construction and expected to be completed in April 2022. Phase 4 (the self-held office block) has not yet commenced construction. As of 31 December 2020, the area pre-sold (first 3 phases) stood at 224,933 sqm, with total sales proceeds (including pre-sale) of RMB 7.2 billion (approximately S$1,477 million).
The project is located in Longgang District in Universiade New Town, close to the Shenzhen University Sports Centre, Shenzhen-Hong Kong International Centre, Shenzhen International College Town and Dayun Park. Connected by rail and highways to downtown Futian District 24 km away, it is about 54 km away from Shenzhen Baoan International airport and 28 km away from Shenzhen North Railway station.