Chinese conglomerate Citic swaps residential properties for China Overseas’ shares and commercial projects
The agreement should have little impact on Citic’s net asset value, analysts say
Citic, China’s largest state-backed conglomerate, will sell nearly all of its residential property projects worth around 31 billion yuan (HK$37.02 billion) to China Overseas Land & Investment in exchange for a 10 per cent stake in the property giant and 6.15 billion yuan of the latter’s commercial properties.
Citic expects to book a gain of HK$9 billion to HK$11 billion from the disposal, on which an agreement was signed on Sunday.
“The transaction will enable the company to focus on commercial real estate, particularly large integrated projects,” Citic said in a filing to Hong Kong’s stock exchange on Monday.
“At the same time, the company will retain its exposure to China’s residential market through its approximately 10 per cent stake in China Overseas.”
The deal, which follows close on the heel of rival China Vanke’s preliminary cooperation pact with subway operator Shenzhen Metro involving a potential assets-for-shares deal, and China Merchants’ intra-group property assets revamp, points to a trend of property assets restructuring among state-backed firms, said Credit Suisse head of Asia real estate research Du Jinsong in a report.
“The trend of property-related restructuring [among] state-owned enterprises is real,” he said. “We expect Greentown [China] to be among the next to benefit.”
