Keppel Corporation (Keppel Capital), through Alpha Asia Macro Trends Fund III (AAMTF III), Keppel Land China Limited (Keppel Land China) and other co-investors, have entered into a shareholders’ agreement with North Bund Keppel Pte. Ltd. (North Bund Keppel) to acquire Yi Fang Tower, a recently completed prime Grade A office and retail mixed-use development located in North Bund, Shanghai, China, for RMB 4.6 billion.
In September 2018, North Bund Keppel, which is a wholly-owned subsidiary of AAMTF III, had entered into a framework agreement with Yi Fang Jing Yi Enterprise Management Co. Ltd. to acquire Yi Fang Tower.
Under the agreement, AAMTF III and Keppel Land China will subscribe for 42.1% and 29.8% stakes in North Bund Keppel respectively, and the remaining stake in North Bund Keppel will be held by the other co-investors. AAMTF III is managed by Alpha Investment Partners Limited (Alpha), the private fund management arm of Keppel Capital. The acquisition is expected to be completed in the second quarter of 2019.
Yi Fang Tower is strategically located in the centre of the North Bund area and is in close proximity to the Lujiazui Financial Centre and the Bund, making the property well-positioned to attract multinational corporations looking to relocate from other areas.
Mr Eric Goh, CEO (China) of Keppel Capital, said, “We have closed deals in Shanghai amounting to more than RMB 14.5 billion to-date for our AAMTF series as well as for co-investors. The proposed acquisition is in line with Keppel Capital’s investment strategy of creating value and driving returns for our investors. Yi Fang Tower is a quality asset that is well-connected to Shanghai’s core central business districts and is expected to meet growing demand from quality tenants in the professional services and financial sectors. This partnership with the co-investors is also testament to the confidence that they have in Keppel Capital in delivering good returns.”
Mr Ben Lee, President of Keppel Land China, said, “Harnessing strengths across the Keppel Group, Keppel Land is collaborating for a third time with Keppel Capital to invest in prime properties in Shanghai. This acquisition of Yi Fang Tower follows the investments in Life Hub @ Jinqiao and Trinity Tower. It is in line with our strategy to grow our commercial portfolio in China, with a focus on first-tier cities such as Shanghai. We are confident that the well-located and highly accessible property will meet the rising demand for prime office and retail space in the fast-developing North Bund area.”
Yi Fang Tower is made up of two 18-storey office towers and a retail podium. It has a total gross leasable area of about 74,400 sm, comprising about 47,500 sm of office space and about 26,900 sm of retail space.
Located in the Hongkou District, Yi Fang Tower is highly accessible and well-connected to the Shanghai Metro, with direct access to the International Cruise Station on Metro Line 12. The completion of Beiheng Tunnel in 2020, which is located within a five-minute drive to the property, will enhance the property’s overall connectivity to other parts of Shanghai. The property has also obtained the Chinese Certification of Green Building in recognition of its sustainable features.
The abovementioned transaction is not expected to have any material impact on the earnings per share and net tangible asset per share of Keppel Corporation Limited for the current financial year.