Morgan Stanley quits Foshan asset

HONG KONG: Morgan Stanley has agreed to sell back its 50% stake in a residential project in Guangzhou's Foshan city to joint-venture partner Hon Kwok Land Investment for HK$200 million (RM86.19 million).

This is the latest sale by the US investment bank's real estate unit, which has offloaded more than 4.8 billion yuan (RM2.34 billion) worth of major mainland property assets since last year.

In January, it was reported that Morgan Stanley Real Estate was in final talks to sell its Infinity Plaza in Shanghai to a Zhengzhou developer for 1.42 billion yuan.

Last year, it sold several assets, including its Shanghai serviced apartment block Shama Xujiahui for about 780 million yuan and an office block, the Exchange, on West Nanjing Road in the core business area of Shanghai, for 2.45 billion yuan to Soho China.

Morgan Stanley was unavailable for comment.

Hon Kwok Land vice-chairman Herman Fung Man-hei said: "[They] asked if we were interested in buying back the stake. We considered it a good opportunity to increase our landbank."

He was referring to the purchase of a 50% stake in Floralmist Holdings, the sole asset of which is the Foshan residential project, covering a total gross floor area of about 272,786 sq m, in the city's Nanhai district.

"They had not invested in the project for a while. We had paid HK$27.5 million on behalf of Morgan Stanley for its agreed share of working capital and other costs incurred by the holding company," Fung said.

The amount has been deducted from the sale price so that the actual amount that Hon Kwok will pay to Morgan Stanley is HK$172.49 million, according to Fung.

The net asset value of Floralmist was HK$32 million and the total amount of shareholders' loan as at December last year was HK$179 million, according to Hon Kwok.

In December 2005, Morgan Stanley acquired a 50% stake in the Nanhai project for about HK$145 million.

Construction will begin next week and Hon Kwok Land will start pre-selling the first phase, comprising more than 100 houses, in November. The selling price of a nearby project owned by Country Garden Holdings is 8,000 yuan per sq m.

Meanwhile, Hon Kwok Land also proposed to buy a 13,000 sq m commercial-office building in Guangzhou from its chairman, James Wong Sai-wing, for HK$144.21 million. The two projects will increase the company's landbank by 150,000 sq m, sufficient to provide for its development needs over the next few years. – South China Morning Post

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