CDL buys Shanghai project for $186m

CDL buys Shanghai project for $186m

SINGAPORE - Building up its presence in China, Singapore-listed City Developments Limited (CDL) has entered into a deal to acquire an office project in Shanghai's Hongqiao district that is in the final stages of construction for 900 million yuan (S$186 million).

The deal involves an indirect wholly owned subsidiary of CDL China entering into an equity transfer agreement to acquire the entire equity interest in Shanghai Meidao Investment Co, which owns the commercial development known as Meidao Business Plaza in the Hongqiao central business district.

The 900 million yuan total transaction value is for the equity as well as the loans of Shanghai Meidao Investment Co, and may be subject to further adjustment as set out in the agreement.

"The acquisition is expected to be funded via internal resources," CDL said in its announcement.

Meidao Business Plaza, with total gross floor area of around 32,300 square metres , is expected to be completed by the second half of this year.

It comprises five office towers, each nine-storey high, and two levels of basement carpark with 351 lots.

When contacted, CDL told The Business Times that it plans to lease the asset for long-term recurring income, though it is open to selling some of the space.

Meidao Business Plaza has been approved for division into strata-titled units ranging from 237 to 522 sq m.

The Leed (Leadership in Energy and Environmental Design) Gold Award development also features sky gardens - one atop each of its towers.

With this acquisition, CDL will have five projects in its China portfolio.

The others are Hong Leong City Center in Suzhou, Eling Residences and Huang Huayuan in Chongqing, and Hongqiao Royal Lake in Shanghai.

"Our residential projects in China have continued to achieve steady sales and are contributing well to CDL's profit," said Mark Yip, chief executive of CDL China.

The wholly owned subsidiary of CDL was set up in 2010 as part of the group's diversification strategy.

Meidao Business Plaza is in Huacao, Minhang District, within the Hongqiao CBD.

It is very near the Shanghai Hongqiao International Medical Center and is surrounded by many international schools, upcoming R&D centres and business parks.

The plaza is around 10 minutes' drive to the Hongqiao Transportation Hub, which includes Hongqiao International Airport and a network of railways, and 15 minutes' drive to the Shanghai National Exhibition and Convention Center, CDL noted.

Mr Yip said the Hongqiao CBD has been identified for fast growth in the Chinese government's 12th five-year plan and is of strategic importance to Shanghai.

The Hongqiao CBD also aims to attract large private enterprises and listed multinational companies.

It is estimated that more than 650,000 employees will work in the area by the end of 2020.

"We will continue to seek suitable investment opportunities to grow our presence in China," said Mr Yip.

CDL shares closed trading on Tuesday at S$9.40, down 19 cents, before the announcement. The fall came amid a broad retreat in the market.

kalpana@sph.com.sg


This article was first published on Feb 15, 2017.
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