Shui On Land buys remaining stake in Foshan development project

Shui On Land - chaired by Vincent Lo Hong-sui - sold two hotels in Shanghai for 2.69 billion yuan (HK$3.38 billion) to hotel operator and landlord Great Eagle - a company controlled by Lo's brother Lo Ka-shui - to reduce debt as it reported a 24 per cent drop in first-half profit.

The deal was signed a day before Shui On announced yesterday that its interim profit fell to 797 million yuan on a decrease in profit margin and a distribution of 92 million yuan to the owners of convertible perpetual securities of China Xintiandi, the commercial property arm of Shui On Land.

"More strategic sales of [non-core] assets will be finalised in coming weeks," Lo said after the announcement.

The company agreed to sell the 357-room Langham Xintiandi Hotel for 1.73 billion yuan and the 403-room The Hub Hotel, now being built in the Hongqiao commercial zone, for 965 million yuan to Great Eagle.

Shui On said the sale would result in a net cash inflow of 548 million yuan, which would reduce its net gearing by 5 per cent. The net gearing ratio was 64 per cent at the end of June.

Managing director Daniel Wan said the firm had locked in 6.47 billion yuan in property sales in the first half and these could be ready for booking in the second half. "We expect stronger sales to be generated from Shanghai from the second half of 2015," he said.