Soho China to Pay $632 Million for 50% in Land Venture on Shanghai’s Bund
Soho China Ltd. (410) will pay 4 billion yuan ($632 million) for a stake in a site on Shanghai’s historic Bund that’s partly owned by Greentown China Holdings Ltd. (3900), the builder seeking to improve cash flow from the sale of projects.
Soho, the biggest developer in Beijing’s central business district, will buy 50 percent of the plot from Greentown and Shanghai Zendai Property Ltd. (755), according to a statement to Hong Kong’s stock exchange today. Greentown, which owns 10 percent of the site, will receive 1.04 billion yuan from the sale, the company said in a separate statement.
Chinese developers are considering selling land and other assets for cash as government curbs to damp escalating home prices are pulling down sales. China intensified measures this year including home-purchase restrictions in 40 cities and higher mortgage requirements.
Although private asset sales by developers are not rare, “a deal of this size and involving three listed companies would send a clearer signal that consolidation has begun,” said Kris Li, a Shanghai-based analyst at SWS Securities Co. “Soho certainly has enough cash for the purchase and it’s in line with the company’s strategies” of focusing on commercial properties.
Soho has at least 17 billion yuan of cash currently, Li estimated.
Fosun International owns the remaining 50 percent of the site, with about 45,472 square meters (489,456 square feet) for mixed office, retail, financial, art and culture development, according to the statement.
More Project Sales
Shares of Soho rose 0.2 percent to HK$5.12 at the 4 p.m. close in Hong Kong, reversing an earlier loss. Greentown declined 1.5 percent to HK$3.38, after earlier falling as much as 3.8 percent. Shanghai Zendai shares were halted.
Greentown is in discussion to sell more of its projects to raise cash, Chief Financial Officer Simon Fung said in a phone interview today, adding that he is “satisfied” with the selling price of the Bund site.
Fung declined to say which projects Greentown is planning to sell.
Shanghai undertook a three-year renovation of the Bund, the city’s colonial-era waterfront boulevard, lined with historic buildings, ahead of the World Expo the city hosted in 2010.
China’s home prices posted their worst performance this year with more than half of the 70 biggest cities monitored in November recording declines after the government reiterated plans to maintain property curbs.
Soho is “not optimistic” about China’s home market in 2012, Chairman Pan Shiyi said on a conference call with reporters today after the announcement. Office prices in less affluent second- and third-tier Chinese cities will decline next year, Pan said.
--Zhang Dingmin, Kelvin Wong. Editors: Andreea Papuc, Linus Chua
To contact the Bloomberg News staff for this story: Zhang Dingmin in Beijing at Dzhang14@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc at email@example.com