Shenzhen Investment Limited announced that the group successfully disposed the Interests in Three Sanshui Project Companies and Pengji Assets Management Company to Evergrande Group at a consideration of RMB5.425 billion($788 million) plus interest on shareholder’s loan. It is expected that SZI will record a net gain after tax of approximately HK$2.912 billion (unaudited data) from the Disposals.
SZI disposed the equity interest and shareholder’s loan in project companies through public listing-for-sale to be conducted on Shenzhen United Property and Share Rights Exchange to successfully divest projects in the third- and fourth-tier cities. The disposed companies include (1) Three Sanshui Project Companies, which together own the development project located at Sanshui District, Fushan City, the PRC. The planned land use of the land is low-density residential and commercial/services usage with undeveloped land of 1,073 mu, and developed but remained unsold GFA of 64,996.14 sq.m.; (2) Pengji Assets Management Company, which owns the development project “Shanglin Garden” (上林苑) located at Zhoushanhe Xincheng, Taizhou City, Jiangsu Province. The planned land use of the project is commercial/residential usage with undeveloped land of 275 mu, GFA of 105,563 sq.m. under construction, and developed but remained unsold residential and commercial site area of approximately 10,394 sq.m..
The public listing-for-sale process in respect with the above four companies’ interest has commenced at Shenzhen United Property and Share Rights Exchange on 25 April 2017. Pengxiang Company, which owns a residential development site with a site area of 159 mu located at Jiangyan District, Taizhou City, was listed on the same day, currently in the bidding process and expected to be sold shortly.
The Group has been divesting the projects in the third- and fourth-tier cities in recent years, and the pickup of real estate market in the third- and fourth- tier cities has created a favorable condition for the disposal of projects in the third- and fourth- tier cities of the Group. The success of the Disposals marked an important milestone in the Group’s disinvestment of the projects in the third- and fourth- tier cities. Upon completion of the Disposals, the proportion of the projects in the third- and fourth- tier cities will decrease from 49% to 38% in term of GFA of land bank. In addition to the optimization of land reserve structure, the Group also expects a net gain after tax of approximately HK$2.912 billion from the Disposals, which provides better return for shareholders. Looking forward, SZI will continue to implement the strategy of intensifying the development in Shenzhen, transform its business model towards “development, sale, holding and management equally”, actively integrate and develop “asset-light” management and service businesses so as to support the Group’s stable and sustainable growth.
Source: Shenzhen Investment Limited