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1. Cheung Kong to bring in Nan Fung on $12b project

2. Kimberley flat sales net $300m for venture

3. Lai Sun shines in Kimberley sales

1. Cheung Kong to bring in Nan Fung on $12b project
Raymond Wang, SCMP 5 November 2004

Cheung Kong (Holdings), Hong Kong's No2 property developer by market value, said private firm Nan Fung Development will take a 10 per cent stake in a luxury residential project it is building in Kowloon.

The two companies will jointly develop the Ho Man Tin site acquired at a recent government land auction by Cheung Kong for HK$9.42 billion, or HK$5,476 per square foot.

Cheung Kong said it would sell a 10 per cent stake in its 100 per cent-owned Trudeau Holdings - the subsidiary that controls the site - to Nan Fung's wholly owned Master Rank Investments for a nominal US$1 (HK$7.80).

Nan Fung will share land costs and other costs of the development in proportion to its stake. Surveyors estimate the project will require a total investment of about HK$12 billion, of which HK$1.2 billion would be funded by Nan Fung. ``The group and Nan Fung have worked together on other projects and the previous experience of working together successfully made Nan Fung the most suitable partner for undertaking the development of the land,'' Cheung Kong said in a statement.

It said it had a HK$50 million deposit on the site and must remit the remaining HK$9.37 billion to the government by Tuesday. Though the consortium has yet to determine how many flats it will build, it said each floor of the luxury development would accommodate two 2,000-square-foot apartments. The Ho Man Tin site fetched a surprisingly high price at auction, exceeding market expectations by more than 30 per cent. In many quarters it was viewed as incontrovertible evidence of a bubble in the property market.

However, Nan Fung's willingness to share the risk clearly reflects its optimism about the luxury sector, Centaline Surveyors managing director Victor Lai said.

International consultancy DTZ Debenham Tie Leung investment director Alvin Yip said profit margins on the Ho Man Tin project appeared minimal based on the estimated total investment cost of HK$7,500 psf - roughly the going rate for new luxury apartments in the area. ``However, profit margins are estimated at 20 per cent after two to three years if the selling price of the project is set at HK$9,000 per square foot,'' Yip said.

Separately, Cheung Kong announced that it had secured a HK$5.8 billion five-year revolving credit line. The general syndication for the loan closed last Friday.

The company did not reveal the purpose of the loan, which carries an interest margin of 0.25 per cent per annum above the Hong Kong interbank offered rate. The loan's co-ordinating arrangers were Bank of China (Hong Kong), BNP Paribas, Citigroup, HSBC, Mizuho Financial Group, Sumitomo Mitsui Banking Corp, Bank of East Asia, Bank of Communications, and Bank of Tokyo-Mitsubishi.

Shares of Cheung Kong fell 0.37 per cent to close at HK$66.50.

2. Kimberley flat sales net $300m for venture
Staff reporter, The Standard 5 November 2004

lai Sun Development and Guoco Group have reaped about HK$300 million from the sale of half of their 50-50 Tsim Sha Tsui joint-venture apartment project.

Shares of Lai Sun began rising from the opening of trade on Thursday and surged after the companies announced the sale results at a mid-afternoon press conference, closing 25.8 per cent higher at HK$0.20.

Trading volume was 53.6 million shares, compared with Lai Sun's usual daily average of around one million. Turnover was HK$10.44 million.

In response to a query from the stock exchange, Lai Sun, a mid-tier developer, stated it knew of no reasons for the sharp rises in price and volume.

The first batch of 80 apartments at Kimberley 26, which went on the market last Friday, sold for an average price of HK$6,400 per square foot, Lai Sun said.

Encouraged by the initial response and convinced that pent-up demand exists, Lai Sun and Guoco, which is also listed locally, plan to offer an additional 48 apartments in the development for sale this week. This time the price will be HK$6,800 psf, a 6 per cent rise.

The 29-storey residential-commercial complex has a total of 168 apartments, ranging in size from 400 to 700 sqft.

The remaining flats could generate as much as HK$400 million in sales, Lai Sun assistant vice-president for marketing and management Julian Poon said.

He said the two firms also stood to reap annual rental income of HK$20 million from leasing the project's 35,000 sqft two-storey shopping arcade.

Lai Sun also plans to launch a low-rise joint-venture housing project in Yuen Long for sale by the end of this year or in early next year, estimated to be worth HK$400 million.

The project will have 50 detached houses,the sale price of which have not yet been set.

Guoco shares closed unchanged at HK$66.75.

Besides property development and investment, the group is engaged in stock brokerage and commodities trading, insurance and fund management services and treasury and investment management.

3. Lai Sun shines in Kimberley sales
ERNEST KONG, SCMP 5 November 2004

Lai Sun Development expects to receive up to $700 million from sales of units in a residential project in Tsim Sha Tsui this month.

The firm, which recently completed a major debt restructuring, has received $300 million since Monday by selling 80 of the 168 units in the Kimberley Road project at an average price of $6,400 per square foot.

The developer would release another 48 units in the single-block project tomorrow, at an average price of about $6,800 per square foot, said Lai Sun Development assistant vice-president Julian Poon. He expects to sell the rest of the units within two to three weeks

"We will reap about $300 million to $400 million in sales for the remaining units to be sold, depending on the response to our price rise," he said.

He would not disclose the profit margin but said construction costs were about $2,000 per square foot.

The cheapest unit to go on sale this weekend is a 433 sqft unit on the eighth floor with a $2.33 million price tag while the most expensive is a 708 sqft unit on an upper floor that has a $5.68 million price tag.

The 25-storey project - a 50-50 joint venture between the developer and finance firm Guoco Group - also includes commercial space.

Mr Poon expects the 35,000 square feet of commercial space to generate rental income of about $20 million a year.

Two restaurant chains had already committed to renting two floors for an average monthly rent of about $40 per square foot, said Mr Poon.

He also said the company had not ruled out selling all the commercial space as one piece.

Meanwhile, pre-sales at the company's 50-house residential development in Yuen Long should begin by the end of the year, Mr Poon said.

The firm's share price jumped 25.78 per cent yesterday to close at 20 cents.