Monday, April 16, 2007
Lo to lead investors on Chinese treasure hunt
By Tom Mitchell and Robin Kwong in Hong Kong
April 13 2007, FT
Hong Kong's most prominent developer of property in China is to head an international consortium to invest in distressed real estate left in the rubble of China's construction boom.
Vincent Lo, chairman of Hong Kong-listed Shui On Construction and Materials, is teaming up with Spinnaker Capital, JPMorgan and others to form the company.
China Central Properties will seek an overseas listing.
Led by Socam, the partners will inject five properties valued at about $250m as well as $200m in cash.
According to Mr Lo,possible listing destinations include London's Aim, Euro-next, Hong Kong's GEM and Singapore.
Deutsche Bank is acting as sole global co-ordinator for China Central Properties.
China's cities are littered with the concrete skeletons of office and residential properties abandoned during construction.
According to CB Richard Ellis, the country's stock of unsold property reached 320m square metres at the end of last year compared with 65m sq m in 2000.
Such assets can be completed a year or two after new capital is injected.
Mr Lo and partners are betting that China Central Properties can realise quick returns and avoid theheadaches of traditional property investment, such as relocating and compensating residents.
"We will be entering the development at a late stage, so the risk is much lower," Mr Lo said at a briefing in Hong Kong yesterday. "It is not like developing a new site where you have towait for design and the construction. This is much faster."
But investing in distressed assets - lan wei lou or "rotten tail buildings" - can involve legal risk. They are often the subject of Byzantine court spats involving bankrupt state companies and jilted Chinese banks.
Socam and partners have already invested in five lan wei louin Beijing, Chengdu, Dalian and Qingdao.
The shares of Mr Lo's other Hong Kong-listed company, Shui On Land, have risen 20 per cent since it raised $880m in a listing last October. ¶ 2:34 AM
April 13 2007, FT
Hong Kong's most prominent developer of property in China is to head an international consortium to invest in distressed real estate left in the rubble of China's construction boom.
Vincent Lo, chairman of Hong Kong-listed Shui On Construction and Materials, is teaming up with Spinnaker Capital, JPMorgan and others to form the company.
China Central Properties will seek an overseas listing.
Led by Socam, the partners will inject five properties valued at about $250m as well as $200m in cash.
According to Mr Lo,possible listing destinations include London's Aim, Euro-next, Hong Kong's GEM and Singapore.
Deutsche Bank is acting as sole global co-ordinator for China Central Properties.
China's cities are littered with the concrete skeletons of office and residential properties abandoned during construction.
According to CB Richard Ellis, the country's stock of unsold property reached 320m square metres at the end of last year compared with 65m sq m in 2000.
Such assets can be completed a year or two after new capital is injected.
Mr Lo and partners are betting that China Central Properties can realise quick returns and avoid theheadaches of traditional property investment, such as relocating and compensating residents.
"We will be entering the development at a late stage, so the risk is much lower," Mr Lo said at a briefing in Hong Kong yesterday. "It is not like developing a new site where you have towait for design and the construction. This is much faster."
But investing in distressed assets - lan wei lou or "rotten tail buildings" - can involve legal risk. They are often the subject of Byzantine court spats involving bankrupt state companies and jilted Chinese banks.
Socam and partners have already invested in five lan wei louin Beijing, Chengdu, Dalian and Qingdao.
The shares of Mr Lo's other Hong Kong-listed company, Shui On Land, have risen 20 per cent since it raised $880m in a listing last October. ¶ 2:34 AM
