On the afternoon of Feb 22, City Developments (CDL) made an SGXnet compliance announcement on interested party transactions, and a press release on corporate action to improve the liquidity of Sincere Property Group in which it acquired a 51% stake for $1.8 billion. The SGX announcement and the press release are unrelated, with the press release indicating that the monetisation of Sincere Property’s assets has begun, with CDL acquiring an asset with pre-sales equivalent of $1,477 million, for $174 million. This takes CDL's total outlay -to date - for Sincere up to almost $2 billion.
CDL announced it has entered into agreements to acquire a 55% interest in a Shenzhen technology park through the acquisition of an 84.6% equity interest in Shenzhen Tusincere Technology Park Development Co for RMB859 million ($174 million), and assume existing shareholder loans proportionately. Sincere will hold the remaining 15.4% equity in Shenzhen Tusincere Technology Park Development Co. With the further cash infusion it is unclear if Sincere's NAV will rise. However, CDL's debt could rise because of the shareholder loans.
Shenzhen Tusincere Technology Park Development Co in turn holds a 65% equity interest in Shenzhen Longgang Tusincere Tech Park which has been valued at RMB8.8 billion (or $1,805 million) by independent valuer, Cushman & Wakefield. The remaining 35% equity interest of the Shenzhen Longgang Tusincere Tech Park is held by Shenzhen Longgang District, a state-owned enterprise.
SEE: City Developments Limited ranked most sustainable company in real estate and in Singapore by Global 100
This effectively gives CDL a 55% interest in Shenzhen Longgang Tusincere Tech Park for $174 million.
Spanning 192,739 sq m, 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 162,144 sq m. The site was acquired in 2015 and comprises offices (about 70%), SOHO apartments (about 20%), 4,887 carpark lots andretail/others (about 10%).
The Shenzhen Longgang Tusincere Tech Park is being developed in four phases. Phase 1 is completed, and Phase 2 and 3 are currently under construction and expected to be completed in April 2022. Phase 4 (the self-held office block) has not yet commenced construction. As at Dec 31, 2020 the area pre-sold (first 3 phases) stood at 224,933 sq m, with total sales proceeds (including pre-sale) of RMB7.2 billion (approximately $1,477 million). CDL's 55% share of pre-sales would be equivalent $812 million.
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. Connected by rail and highways to downtown Futian District 24 km away, it is about 54 km away from Shenzhen Baoan International airport and 28 km away from Shenzhen North Railway station. The Longgang District is located northeast of Shenzhen City, 30 km from Hong Kong and 150 km from Guangzhou.
