− Transaction involves acquisition from Sincere Property and two entities of China Ping An totalling 84.6% interest in a Chinese tech park developer for RMB 850 million; CDL will also assume its proportionate share of shareholders’ loans
− Combined transaction will accord CDL an effective 55% stake in a tech park in Shenzhen which has been independently valued at RMB 8.8 billion
− Tech park located at the technology hub of Greater Bay Area in southern Chinadeveloping 413,634 square metres of gross floor area over four phases
City Developments Limited (CDL) said today it has entered into agreements to acquire from Sincere Property Group (Sincere Property; 协信远创) – its joint venture investment in China – and two entities of China Ping An (Ping An; 中国平安), equity interests which will accord the Singapore real estate conglomerate a combined 55% effective interest in a Shenzhen technology park.
In its first major corporate action since forming a special working group to improve liquidity of Sincere Property, CDL said it has acquired from the three entities a total of 84.6% equity interest in Shenzhen Tusincere Technology Park Development Co. Ltd. (“the Holdco”; 深圳启迪协信科技园发展有限公司) for RMB 850 million (approximately S$174 million1) and will assume existing shareholders’ loan proportionately. Sincere Property will continue to hold the balance 15.4% equity interest in the Holdco.
The Holdco controls 65% equity interest in Shenzhen Longgang Tusincere Tech Park (“the Project”; 深圳龙岗区 启迪协信科技 园) which has been valued at RMB 8.8 billion (approximately S$1,805million1) by independent valuer, Cushman & Wakefield. The remaining 35% equity interest of the Project is held by Shenzhen Longgang District state-owned enterprise (深圳龙岗区商业服务集团有限公司).
This asset acquisition will reduce the gearing of Sincere Property which has faced liquidity issues since the onset of the COVID-19 pandemic and tighter rules imposed by China related to borrowings of real estate developers. 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 announced on 4 January 2021 to improve liquidity of its JV equity investment in Sincere Property.
To date, CDL’s total investment in Sincere Property remains at S$1.8 billion as announced inOctober 2020. The Group has not provided any further liquidity support or corporate guarantees to Sincere Property since.
Mr Kwek Leng Beng, CDL Executive Chairman, said, “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.”