Singapore property developer CDL strikes deals worth nearly $1b in China

Commercial buildings including the China Central Television (CCTV) Headquarters, center, stand in the central business district of Beijing. Photographer: Tomohiro Ohsumi/Bloomberg

Singapore-listed property major City Developments (CDL) on Wednesday announced its plan to invest nearly RMB 5.5 billion (approximately S$1.1 billion or $804 million) in China including the purchase of an indirect stake in Sincere Property Group.

According to a statement, CDL has entered into a series of agreements with HCP Chongqing Property Development Co Ltd (HCP), the indirect controlling shareholder of Sincere Property Group (Sincere).

The investment is expected to be completed by the fourth quarter of 2019.

Upon completion of the investment, the group will hold a 29.9 per cent equity interest in HCP and through HCP and its subsidiary, an approximate 24 per cent effective equity stake in Sincere, it said in a statement.

In addition, CDL also entered into an agreement with Sincere to acquire a 70 per cent stake in Shanghai Hongqiao Sincere Centre for RMB 1.2 billion (approximately S$247 million).

Shanghai Hongqiao Sincere Centre is a commercial asset located at Hongqiao, Shanghai comprising office, serviced apartment and retail components.

This acquisition is expected to be completed by the third quarter of 2019.

The aggregate investment amount for both transactions is RMB 6.7 billion (approximately S$1.36 billion or $994 million) and as at 31 March 2019, RMB 3.3 billion (approximately S$662 million) has been extended in the form of debt.

“Rapid urbanisation, economic growth and rising disposable incomes will continue to drive demand for real estate in China. This transformational deal is CDL’s single largest investment in China to date,” said CDL Group CEO Sherman Kwek.

“It is a rare opportunity to acquire a meaningful stake in an established platform at an attractive valuation. This game-changing initiative will drive CDL’s next phase of growth in this important market,” he added.

CDL reported profit of S$199.6 million ($145.7 million) in the first quarter of 2019 on Wednesday, versus S$85.3 million in Q1 2018.