Singapore-listed property developer City Developments Ltd (CDL) has entered into agreements to acquire a majority stake in Shenzhen technology park from Sincere Property Group and two entities of China Ping An. Sincere Property is its joint venture investment in China.
CDL said in a statement that it has acquired a total of 84.6% equity interest in Shenzhen Tusincere Technology Park Development Co. Ltd, the holding company, for 850 million yuan ($131.52 million) and will assume the existing shareholders’ loans proportionately. Sincere Property will continue to hold the balance 15.4% equity interest in the holding company.
The equity interests will accord CDL a combined 55% effective interest in the property, the statement added.
The holding company controls 65% equity interest in Shenzhen Longgang Tusincere Tech Park, which has been valued at 8.8 billion yuan by independent valuer Cushman & Wakefield. The remaining 35% equity interest of the project is held by Shenzhen Longgang District state-owned enterprise.
Spanning 192,739 square metres (sq m), the Shenzhen Longgang Tusincere Tech Park has a total saleable gross floor area (GFA) of 413,634 sq m plus a self-held office block with GFA of 162,144 sq m.
The site was acquired in 2015 and comprises offices, apartments, car park lots, and retail. The project is being developed in four phases. Phase 1 is completed, while Phase 2 and 3 are expected to be completed in April 2022.
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. The Longgang District is located northeast of Shenzhen City, 30 km from Hong Kong, and 150 km from Guangzhou.
Liquidity issues at Sincere Property
This asset acquisition will help Sincere Property, which has faced liquidity issues since the onset of the COVID-19 pandemic and tighter rules imposed by China on the borrowings of real estate developers, CDL said. The operating and regulatory environment in China has been evolving rapidly since the group invested in Sincere Property in April 2020.
The acquisition is the first action by the CDL special working group to improve the liquidity of its JV equity investment in Sincere Property.
CDL’s total investment in Sincere Property stands at S$1.8 billion ($1.36 billion) as on October 2020. The group has not provided any further liquidity support or corporate guarantees to Sincere Property since.
“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 executive chairman Kwek Leng Beng said.