City Developments enters S$1.1 billion deal to invest in China developer Sincere Property

City Developments signage on construction hoardingCity Developments signage on construction hoarding

City Developments entered a deal to invest in China property developer Sincere Property Group for a total 5.5 billion yuan, or around S$1.1 billion, the Singapore real estate company said in a filing to SGX before the market open Wednesday.

“This transformational deal is CDL’s single largest investment in China to date,” Sherman Kwek, City Develoments’ CEO, said in the statement.

“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 will be able to significantly boost its scale and accelerate its growth in this huge market with a substantial portfolio and pipeline of development projects and investment properties.”

The deal increases City Developments’ China footprint to 20 cities from three and raises its portfolio allocation to the mainland to 15 percent from 9 percent, as of end-December, the filing said.

Once the deal is complete, City Developments will hold an around 24 percent effective equity stake in Sincere Property, making it the second largest shareholder after the Chinese company’s founder and Chairman Wu Xu, the filing said.

Wu Xu said the investment would accelerate Sincere’s growth as it increases its land bank and pipeline of properties.

The investment, which is expected to be completed by the fourth quarter, includes a share subscription and a four-year interest-bearing loan, City Developments said.

In addition, City Developments will acquire a 70 percent stake in Shanghai Hongqiao Sincere Centre (Phase 2) in Shanghai’s Hongqiao central business district for 1.2 billion yuan, or around S$247 million, it said. Shanghai Hongqiao Sincere Centre includes offices, serviced apartments, a retail component and a basement carpark, the filing said.

Sincere Property has a 70 development projects across 20 Chinese cities as of end-December, with residential project ranging from high-end to mass-market. It also has more than 15 business parks under development or in operation, as well as 14 retail malls, two serviced residences with 536 apartments and five hotels with around 1,400 rooms.

 

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