Brookfield, a New York-based commercial real estate operator, will invest into China Xintiandi in return for convertible perpetual securities of $500 million and 415 million warrants to be issued by Shui On exercisable at HK$2.85 per share, according to a statement to the Hong Kong stock exchange. Brookfield may invest as much as $250 million in addition within 24 months after the completion of the transaction, it said.
Shui On is seeking to pay down debt and improve its cash position with the transaction, while using part of the proceeds to fund the unit’s operations and future acquisitions, the Shanghai-based developer said. Having Brookfield as a strategic investor will also help bring China Xintiandi more opportunities in the country’s commercial real estate market as well as better financial management, according to the statement.
China Xintiandi developed projects including the Xintiandi restaurant and bar district in Shanghai. The name means New Heaven and Earth in Chinese.
Shui On shares jumped as much as 4.1 percent before falling 0.7 percent to HK$2.67 as of 3:47 p.m. in Hong Kong.
The developer’s net income jumped 27 percent to 1.1 billion yuan ($181 million) in the first half of this year from a year earlier, the company said last month. Cash and bank deposits rose 40 percent to 12.1 billion yuan as of June 30 from the end of last year.
Shui On, which has been preparing for a share sale by the unit, said in January it would spin off China Xintiandi to focus on development.
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