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Metro takes 35% stake in joint venture to acquire mixed-use building in Shanghai
METRO Holdings Limited has acquired a 35 per cent stake in a joint venture that is investing in Shanghai Plaza, a mixed-use building in Shanghai worth 2.9 billion yuan (S$613 million).
The joint venture company, Shanghai Yi Zhou Property Management Co Ltd, has acquired a 90 per cent stake of the building, with the intention to acquire the remaining 10 per cent by 2020.
This acquisition was undertaken via a sale and purchase agreement with Hangzhou Huan Bei Silk Clothing City Co Ltd for a 90 per cent stake in Shanghai Yong Ling Property Development Co Ltd, which owns Shanghai Plaza.
The agreement is subject to approval from Hangzhou Huan Bei's ultimate shareholder, a listed company on the Shanghai Stock Exchange.
Metro Holdings said that this investment is in line with the group's strategy to further grow its presence in China, particularly in high-growth cities such as Shanghai, where it has established a firm foothold.
Located at the prime Huai Hai Zhong Road in Huang Pu district, Shanghai Plaza has a gross floor area of 40,693 sq m spanning across seven floors.
The property is also close to the popular shopping district Xintiandi, People's Square and the Lujiazui CBD, with connectivity to major train lines and expressways.
Metro Holdings chairman Winston Choo noted that this strategic investment through the joint venture will provide the group an opportunity to tap its retail expertise and network to enhance the value offerings of this property.
Re-development, conversion and upgrading projects in the first-tier cities of China are becoming popular and increasing in demand, he said.
In Shanghai, Metro currently owns 60 per cent of retail mall Metro City and Grade-A office building Metro Tower since 1993.
Both buildings are located in the prime district in Xujiahui, Shanghai, directly linked to an underground MRT and offering convenient access to public transportation.
In September last year, Metro acquired a 30 per cent stake in three office buildings in Bay Valley, spanning 98,000 sq m in Yangpu district of Shanghai. It is to be developed into a global innovation and technology hub.
"China continues to be a core market to Metro," said Mr Choo. "Shanghai, being the key gateway city, the financial and commercial hub of China, is set to overtake Hong Kong as Greater China's largest office market by 2020.
"This acquisition will further augment Metro's commercial portfolio and further our presence in China, particularly in Shanghai."