Media centre

You are here:Home / Media / China Overseas Land & Investment Limited Announces Details of Acquisition of Property Portfolio from CITIC Group
China Overseas Land & Investment Limited Announces Details of Acquisition of Property Portfolio from CITIC Group Author:China Overseas Land and Investment Ltd.

(Hong Kong, 29 June 2016) China Overseas Land & Investment Limited (“COLI”, or the “Company”; Stock Code: 00688.HK) announces the details of the acquisition of property portfolio from CITIC Group (as defined hereunder). On 14 March 2016, COLI reached an agreement with CITIC Pacific Limited (“CITIC Pacific”), CITIC Corporation Limited (“CITIC Corporation”, together with CITIC Pacific, the “CITIC Sellers”) and CITIC Limited (together with its subsidiaries, the “CITIC Group”). The Company will acquire the CITIC target companies, and integrate substantially all the residential-focused property development projects in the PRC currently owned by CITIC Limited through CITIC Pacific and CITIC Corporation. As consideration, the Company will issue consideration shares to the CITIC Sellers, and also transfer a portfolio of the Company’s properties to the CITIC Sellers. The property portfolio of the CITIC target companies include 121 property projects, and as of 30 April 2016, a total GFA of approximately 31.55 million sq. m, with attributable GFA of approximately 23.52 million sq. m (joint venture projects counted on a pro rata basis), spanning across 25 cities in China, with total GFA of 20.97 million sq. m land bank from 10 major cities: Beijing, Shanghai, Guangzhou, Shenzhen, Foshan, Suzhou, Qingdao, Dalian, Tianjin and Chengdu. This transaction will greatly boost COLI’s land bank, reinforcing the leadership position of COLI in 1st and 2nd tier cities, increasing COLI’s land bank in the above cities by approximately 210%. Since the announcement, both COLI and CITIC have been working closely together to ensure smooth integration.

The initial consideration of the acquisition is RMB31,000 million (equivalent to approximately HK$37,080 million), which shall be adjusted to the final consideration (provided that its amount is not more than 105% of the initial consideration and not less than 95% of the initial consideration). The final consideration shall be settled by allotting and issuing approximately 1,096 million consideration shares at an issue price of HK$27.13 per consideration share to the CITIC Sellers, representing approximately 11.11% of the existing issued share capital of the Company and approximately 10.00% of the issued share capital of the Company as enlarged by the issue of the consideration shares. Concurrently, the Company will transfer property assets to CITIC Group with a value of approximately RMB6,149 million as part of the consideration. After the completion of the transaction, CITIC Sellers will be the second largest shareholder of COLI and continue to benefit from the growth of the property market in PRC. China State Construction Engineering Corporation Limited, through China Overseas Holdings Limited, will maintain a shareholding above 51% of the issued share capital of the Company.

Post transaction, COLI’s total assets will increase by approximately 36.3% from approximately HK$427.237 billion to approximately HK$582.248 billion. COLI’s pro-forma 2015 gearing ratio after the transaction will remain below 40%, still among the lowest in the industry. As a result of the transaction, the Company will acquire a sizable property development land bank in one-go, with considerable saleable resources in the pipeline. COLI will leverage on its own professional and management strength, raise profitability through increasing turnover, controlling construction cost and financing costs.

This transaction highlights the ability of the Company to seize potential opportunities in the real estate market under industry consolidation backdrop. Going forward, the Company will continue to prudently assess acquisition opportunities, to reinforce and enhance its leading position in the PRC real estate industry. After this transaction, COLI will maintain close co-operation with CITIC Group, to promote and capture opportunities in the market, and continue to leverage on COLI’s competitive advantage in the real estate industry and related businesses.

Related news