Friday, May 15, 2009

China Development Bank Buys Office Building developed by R&F Properties at 22.7K Yuan per SQM

The long speculated moves by R&F Properties to sell its commercial properties and to raise funds through diversified channels turned out to reach a deal lately. The Hong Kong-listed developer announced yesterday that it had sold a half of the offices and the naming rights of the R&F Yingtai Place at Pearl River City, CBD of Guangzhou City, to the Guangdong Branch of China Development Bank(CDB) at a price of around 500 million yuan, marking the biggest deal in Guangzhou’s office market this year.
“We have gone through a 6-month negotiation in efforts to sell this property,” said Li Silian, Chairman of R&F Properties. With a total sales of over 8 billion yuan in the first four months of this year, the latest transaction will make a significant relief to R&F’s tightened cash flow.
According to R&F’s release, the part of property bought by CDB includes 10 floors of offices and 1 floor of retail space, in addition to dozens of parking spaces, with a GFA of over 22,000 sqm, accounting for about 25 per cent of the whole property.
The unit price of 22,700 yuan per sqm is moderately lower than the price level of premium offices in the CBD of Guangzhou. However, the purchase includes several thousands square meters of retail space at the third floor, which is expected to bring a significant fair value gain in the future, noted Wu Deli, president of the CDB’s Guangdong Branch, the prices of many non-ground floor retail properties in CBD are above 50,000 yuan per sqm.