Metro buys CBD area site in Jiangxi

Metro buys CBD area site in Jiangxi

Metro Holdings has acquired a mixed development site in the new central business district area of Nanchang, Jiangxi province, China, for 1.92 billion yuan (S$375 million), together with Hong Kong-listed Chinese property developer Top Spring International.

The 269,454 square metre leasehold land parcel in Honggutan New District has a plot ratio gross floor area of 795,000 sq m, it said yesterday.

Metro and Top Spring plan to develop a large, upscale urban mixed development - including commercial, office, residential and entertainment components - on the plot.

The successful bid for the land was jointly made by Metro's indirect wholly owned subsidiary, Metro Shanghai HQ, and two of Top Spring's indirect wholly owned subsidiaries, Shenzhen Top Spring Ding Sheng Investment Development, and Top Spring Insite Commercial Property Holdings.

Metro through its subsidiary, Crown Investments Ltd, has a 5 per cent equity stake in Top Springs.

The joint bidders will set up a joint-venture company in China to develop the land for sale and investment. Metro's 30 per cent share of the total investment will be 576 million yuan, arrived at on arm's length negotiations, it said, and it intends to fund its investment from internal sources. Top Springs will own the remaining 70 per cent of the project.

Metro said it is expanding its property interests in China and sees this investment as an "ordinary course of property development business in China".

The land use rights for the plot will grant 70 years for residential use and 40 years for commercial, office and entertainment uses.

DMG & Partners yesterday maintained a "buy" on Metro's shares with a target price of $0.90 per share.

Analyst Goh Han Peng said: "The land cost of 2,400 yuan psm (per sq m) really appears reasonable and should result in further net asset value (NAV) uplift upon completion.

"This latest investment comes on the back of another investment in a leasehold site at Prince Charles Crescent, in a government land tender that it won jointly with partners Wing Tai and United Engineers. We see these new investments as further testament of the group's ability to recycle capital successfully and generate NAV growth," he said.

Metro said it did not expect this transaction to have any financial impact on the group for the financial year ending March 31, 2013. The counter closed yesterday half a cent lower at 81 cents.



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