SKYLINE Technologies -- News Update (1 October 2005 )

1 October 2005

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1. Hongkong Land stakes $6b on Macau with Shun Tak

2. Battle lines drawn on urban renewal

3. Chao firm to spend $2b on Coloane project

4. HK Land in Macau first with Shun Tak

1. Hongkong Land stakes $6b on Macau with Shun Tak
PEGGY SITO, SCMP 1 October 2005

Talking shop …. Shun Tak’s Daisy Ho and Hongkong Land’s Robert Wong, who says
the deal will not be the firms’ last in Macau: Photo: Edward Wong

Hongkong Land Holdings has made its first foray into Macau's property market in a joint venture with Shun Tak Holdings to build a $6 billion residential-retail-hotel project on the waterfront.

Robert Wong Yau-chung, a residential property executive director of Hongkong Land, said the development - with a gross floor area of 2.6 million square feet - "is definitely not our last project in Macau".

The project, which will not include gaming, is expected to be completed in 2009.

Mr Wong said the company had no timetable to announce its next Macau move.

Central's biggest landlord, lured by Macau's bubbling economy which grew 8.2 per cent in the second quarter, said it had agreed to pay Pansy Ho Chiu-king, a daughter of Shun Tak chairman Stanley Ho Hung-sun, $638.5 million in cash for a 49 per cent stake in a 197,660 sq ft site.

Ms Ho is also the managing director of Shun Tak.

The site is adjacent to the casino-hotel complex MGM Grand Paradise, a 50-50 venture between the United States-based MGM Mirage and Ms Ho.

As part of the arrangement, Shun Tak would acquire the remaining 51 per cent stake from Ms Ho for $664.6 million, said Daisy Ho Chiu-fung, a deputy managing director of Shun Tak and sister of Ms Pansy Ho.

The consideration, subject to the final size of the development, will be settled by an issue of new shares.

Shun Tak said it would issue between 89.7 million and 100.6 million shares at $6.81 each to Ms Pansy Ho for the purchase.

Neither party would disclose the investment cost for the joint venture but Shun Tak said in yesterday's announcement that its 51 per cent stake was estimated to be no more than $2.9 billion, including land cost.

The development will incorporate an estimated 1.9 million sq ft of residential and serviced apartments, all with a view of Nam Van Lake and Macau Tower.
It also includes about 380,000 sq ft of retail space on the lake front that will be managed by Hongkong Land and a 320,000 sq ft, 210-room, five-star hotel, which will be managed by Mandarin Oriental Hotel.

Mandarin Oriental manages Mandarin Oriental Hotel in Macau, which is equally owned by Shun Tak and the hotel group.

"There will be no gaming element in this development complex," Mr Wong said.

The gaming business was not the company's investment strategy, he added.

He said the project's location would be at the heart of the Macau casino district.

Not far away is the Lisboa hotel casino, which is owned by Mr Ho, and MGM Grand Macau, which is slated to open in late 2007.

The project is expected to be approved by the Macau government in a few months.

Mr Wong believes Macau will see a robust demand for quality homes despite concerns over the fast rising prices.

"The outlook is good and that is why we see other Hong Kong developers going into the market," he said.

Henderson Land Development has a $4 billion residential-retail-hotel complex in the Taipa reclamation area in the pipeline while Kerry Properties is planning to build a high-end residential project in Cotai with a gross floor area of at least 2.8 million sq ft.

2. Battle lines drawn on urban renewal
Doug Crets, The Standard 1 October 2005

Chief Executive Donald Tsang's plan to build a HK$6 billion government headquarters on the long-vacant Tamar site in Central is crystalizing the debate over the direction Hong Kong's urban environment should take.

Chief Executive Donald Tsang's plan to build a HK$6 billion government headquarters on the long-vacant Tamar site in Central is crystalizing the debate over the direction Hong Kong's urban environment should take.

Against Tsang's wish for a government headquarters at the site, the pro- Beijing Democratic Alliance for the Betterment and Progress of Hong Kong and its property developer allies say they want yet more commercial and retail space there in one of the world's most crowded city centers.

But this time the questions are coming from dozens of elite business professionals rather than the traditional green protest groups who have largely been ignored by the government.

They include businesses like the Kadoorie Group, the Airport Authority, and CLP Power, as well as such figures as Hongkong & Shanghai Banking Corp chairman Vincent Cheng and chief operating officer Andrew Long, and Swire Properties director and general manager Gordon Ongley.

They belong to a variety of civic groups formed in the past few months to attempt to persuade the government to take a closer look at policy decisions they feel are damaging the harbor and culturally rich neighborhoods such as Wan Chai's "Wedding Card Street," which is to be redeveloped.

Concerned that Hong Kong has fallen far behind other world cities in attempting to preserve its neighborhoods as vibrant communities, they met recently as part of an attempt to influence the dialogue on "urban regeneration."

Says Paul Zimmerman, convenor of Designing Hong Kong Harbour District, an urban design umbrella group: "The failure of Hong Kong is that its urban and transport planning mechanism is outdated, and there is no leadership apparent within government willing to take charge."

"Change will have to come either from the chief secretary or the chief executive's office, and they appear pre- occupied with China relations, constitutional affairs and `lazy' large-scale infrastructure and development projects" like the West Kowloon cultural district.

Zimmerman adds that he and his associates intend to submit a proposal directly to Tsang, advocating a secretariat for planning to centralize planning decisions that are now shuffled between as many as 30 different fragmented agencies and departments.

Activists say the government is planning to increase the total gross floor area by 9.24 million square feet on reclaimed land in Central - twice as much as the entire International Finance Center site, which includes a shopping mall, hotel and serviced apartments.

The projected government headquarters at the Tamar site itself will cover 3.69 million sqft, with 322,000 sqft of parking.

Analysts outside Hong Kong say planning for a sustainable future is increasingly demanding a mentality that puts design and community attitudes first.

One of those participating in this effort is Richard Brown, who was invited to Hong Kong to speak to professionals about urban regeneration and London's success in urban planning.

He played a major role in turning parts of London's Thames Valley into the largest urban green space in England's history to prepare for the 2012 Olympic games.

His message to Hong Kong - do not just build, but build better and smarter and the city will prosper.

Richard Marshall, regional director of urban design for the Asian wing of EDAW, said: "To be competitive in the global economy, you have to create spaces people want to be in."

Peter Cookson Smith, director of design firm Urbis, works very closely with Hong Kong's Planning Department.

"There is a paralysis in government about what to do next," he said.

He says that Hong Kong lacks the clear mechanisms that other countries have to put "good projects, done with feasibility studies," in place.

3. Chao firm to spend $2b on Coloane project
Staff reporter, The Standard 1 October 2005

Cheuk Nang (Holdings), a Hong Kong- listed firm controlled by property tycoon Cecil Chao, will spend HK$2 billion developing a Macau site it plans to buy.

The announcement came as the company said net profit for the year to the end of June surged 1,195 percent to HK$373.3 million from HK$28.8 million a year ago, thanks to gains arising from revaluation of investment properties. Turnover about doubled to HK$101 million.

The company will report "plans for investing HK$2 billion in the development at Coloane Island" Monday, executive chairman Chao said Friday.

The site, with an area of 97,359 square feet, is located on the north side of Coloane Island. Cheuk Nang said last week it will pay HK$800 million for a 99 percent stake.

Cheuk Nang has said it plans to build a complex on the site that will house deluxe apartments for sale, serviced apartments and a clubhouse with a casino, to be leased to an operator.

The firm, which had HK$8.4 million in cash as of the end of last year, said it will fund the development from internal resources. It has already paid a HK$266 million deposit on the site.

Shares of Cheuk Nang have lost 5.73 percent since the announcement of the Macau site purchase, trimming the stock's gain to 18.3 percent this year.

4. HK Land in Macau first with Shun Tak
Danny Chung, The Standard 1 October 2005

Pansy Ho, with father Stanley Ho, is said to have cut the deal with Hongkong Ladn,
and Shun Tak came in after tahtn. Photo: Sing To

Shun Tak Holdings, run by casino mogul Stanley Ho, has formed a joint venture with Central's biggest landlord Hongkong Land to develop a mixed- use property project in Macau.

Shun Tak, a ferry services to property group, paid HK$665 million for a 51 percent stake in the site, located at the reclamation area on Taipa Island, according to a stock exchange notice released Friday. The site is adjacent to the MGM Grand Paradise casino and hotel complex that is currently being built.

The seller was Ho's daughter, Pansy, executive director of Shun Tak.

Hongkong Land paid HK$639 million for the remaining 49 percent stake, marking its first foray into the property market in Macau.

The price paid by Shun Tak and Hongkong Land represents a 43 percent discount to the latest HK$2.3 billion valuation of the site made by property consultant Chesterton Petty.

Shun Tak deputy managing director Daisy Ho did not answer a question on why the site was sold at such a large discount to its estimated value, saying only that Shun Tak agreed to its price only after Hongkong Land had cut a deal with Pansy Ho.

The project will feature 1.9 million square feet in gross floor area of residential flats and serviced apartments plus 380,000 square feet of high-quality retail space and a 320,000 square foot, 210-room luxury hotel.

The hotel will be run by Mandarin Oriental Hotel Group for 25 years under a management agreement. There will be no casino on the property.

Depending on government approval, the residential and retail portions are due for completion in 2008, with the hotel and serviced apartments following in 2009.

Daisy Ho said "firm figures" for total investment on the project are not available because the building plans had yet to be approved by the government. She expected approval to take a few months.

However, according to Shun Tak's stock exchange notice, estimated total development costs attributable to Shun Tak would not exceed HK$2.9 billion, including land costs.

Based on historical construction cost data compiled by construction consultant Levett & Bailey, total construction costs alone could total HK$2.7 billion.

Shun Tak will rely on internal resources to finance its part of the development, Daisy Ho said.

While both companies said there would be no clear division of labor for tasks in the joint venture, she said Shun Tak would manage the sale of residential flats and serviced apartments while its partner would manage the retail mall.

The company gave no indication of when presales of flats would be conducted. Hongkong Land executive director Robert Wong said it was too early to say when presales would be conducted.

UBS analyst Eric Wong maintained his "buy" rating for Shun Tak, saying it made a smart move in partnering with expert companies for the project.

"The most important thing to note is that they appointed two world-class managers to look after this property," he said, adding that Shun Tak's HK$2.8 billion of cash on hand should be plenty to finance the project.