City Developments Limited (CDL) has entered into agreements with Sincere Property Group (Sincere Property) and two entities of China Ping An to acquire a total of 84.6% equity interest in Shenzhen Tusincere Technology Park Development Co. Ltd. for RMB 850 million (approx. S$174 million) and will assume existing shareholders’ loan proportionately.

The acquisition will accord CDL an effective 55% stake in Shenzhen Longgang Tusincere Tech Park (深圳龙岗区启迪协信科技园), which has been valued at RMB 8.8 billion by Cushman & Wakefield.

Large-scale development in China’s high-growth “Silicon Valley”

Spanning 192,739 square metres (sqm), the tech park has a total saleable gross floor area (GFA) of 413,634 sqm plus a self-held office blook with GFA 162,144 sqm. It comprises offices (about 70%), SOHO apartments (about 20%), 4,887 carpark lots and retail/others (about 10%).

The project is being developed in four phases, with Phase 1 complete, and Phases 2 and 3 expected to be completed in April 2022. As of 31 December 2020, total sales proceeds (including pre-sale) for the first three phases stood at RMB 7.2 billion (approx. S$1,477 million).

Located in the Longgang District (龙岗区), the development is close to the Shenzhen University Sports Centre, Shenzhen-Hong Kong International Centre, Shenzhen International College Town and Dayun Park, and well-connected by rail and highways to other districts. It is about 54km from Shenzhen Baoan International airport and 28 km away from Shenzhen North Railway station.

Longgang District is also a key base in Shenzhen for high-tech, new technology and new manufacturing enterprises with over 370 key enterprises, while Shenzhen is one of the fastest-growing real estate markets in the country.

First action to improve liquidity of Sincere Property

This asset acquisition will reduce the gearing of Sincere Property which has faced liquidity issues since the onset of the COVID-19 pandemic and tighter rules imposed by China related to the borrowings of real estate developers. The operating and regulatory environment in China has been evolving rapidly since the Group invested in Sincere Property in April 2020.

The acquisition is the first action by the CDL special working group announced on 4 January 2021 to improve liquidity of its joint venture equity investment in Sincere Property.

CDL Executive Chairman Mr Kwek Leng Beng said, “In executing this asset acquisition the CDL working group is accelerating efforts to implement the restructuring of Sincere Property. Our focus is to improve liquidity while limiting any additional financial exposure by CDL to the investment in Sincere Property.”