COFCO looks to HK expertise
Updated: 2014-10-18 08:35
By Celia Chen in Hong Kong(HK Edition)
Han Shi, COFCO Land executive director and general manager, says the group plans to invite Hong Kong property developers to help manage some of its projects on the mainland. [Photo provided to China Daily]
COFCO Land Holdings Ltd - the only commercial property service platform of the COFCO Group - is in talks with Hong Kong developers to enlist their expertise and experience in managing some of its projects on the mainland.
"I can confirm we're talking to Hong Kong property developers on running some of our mainland projects to take advantage of their rich experience in the management of commercial properties. But, I'm unable to reveal further details at this stage pending the formal signing of an agreement," Han Shi, executive director and general manager of the Hong Kong listed enterprise, told China Daily.
"So far, we've won an agreement on cooperation with Government of Singapore Investment Corporation in a 'Joy City' (COFCO Land's flagship brand) project in Yantai, Shandong province," Han revealed.
COFCO Land recently agreed to acquire the companies that hold six "Joy City" properties and a commercial property and non-controlling interest in two property projects on the mainland for approximately HK$12.46 billion ($1.61 billion) to be paid in cash, representing a 42.7-percent discount to net asset revaluation, by June 2014, plus the amount of the shareholder loans.
COFCO Land intends to sell debt and issue shares to finance the acquisition. The group is buying companies owned by its parent, COFCO Corp, that hold the six real-estate units in Beijing, Shanghai, Tianjin, Yantai and Shenyang.
"'Joy City' projects are COFCO's core assets. Thus, Hong Kong developers always have an interest in cooperating with us. We believe cooperative agreements can be expected in future," Han said.
He predicted that with further acquisitions, COFCO Land will be able to strengthen its role as a mixed-use complex and commercial-property developer with its parent company's strong support. Thus, he believes, the COFCO Group will have a larger property portfolio with a potential to attain steady and sustainable returns.
Yao Changlin, vice-general manager of COFCO Land, explained that the company has been reeling from the nationwide crackdown on graft. The country's anti-graft and frugality drive has hit Waldorf Astoria Beijing, which COFCO upgraded and reopened in late February.
As for future development plans, Han said he hopes contributions from COFCO Land's rental revenues will improve in future. "Rental income should account for 40 percent of the group's total revenues in the enlarged group as a result of acquisitions."
He added: "The mainland's commercial-property market is promising, but the biggest challenge for us is growing homogenized competition among rivals. However, I believe stronger competition will create more mergers and acquisitions (M&As). We're eyeing more M&As in the second half of the year."
(HK Edition 10/18/2014 page8)