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OUELH to co-develop Shenzhen hospital for 126.3m yuan

OUE Lippo Healthcare (OUELH) will jointly develop a hospital in Shenzhen, China, with Hong Kong-based, state-owned conglomerate China Merchants Group (CMG).

OUELH will do so by buying a 50 per cent stake in Riviera Quad International, which owns the land use rights of the land parcel, from China Merchants Shekou Industrial Zone (CMSK) for 126.3 million yuan (S$24.6m).

Riviera owns Lekang Assets (Shenzhen) Co Ltd, which in turn owns the land use rights of the Prince Bay, Shekou land parcel that will be used to develop the hospital. Lekang has a registered capital of 98 million yuan.

Lekang's land use rights is for a term of 50 years, effective from Dec 26, 2016 to Dec 25, 2066, and the land has a site area of about 6,247 square metres with a plot ratio of 4.8.

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The 126.3 million yuan for the 50 per cent stake in Riviera will be paid for by external borrowings, said OUELH.

The other 50 per cent is owned by Shenzhen exchange-listed CMSK's indirect wholly-owned subsidiary Golden Pinnacle.

OUELH commissioned JLL (Beijing) Real Estate Appraisal & Consultancy to conduct an independent valuation of the land as at Oct 31, 2019. It valued the parcel at 161 million yuan.

The deal is expected to complete within the fourth quarter of fiscal 2019.

As part of the agreement, OUELH and CMSK will look to change Riviera's name to China Merchants Lippo Property Holdings (Hong Kong) Co.

OUELH had initially on Dec 12, 2018, signed a non-binding letter of intent with CMSK to develop the hospital, before inking the share subscription deal on Nov 29.

OUELH is already working with CMG to manage three hospitals in China for one year, which commenced on Feb 1, 2019.

Catalist-listed OUELH shares were unchanged at S$0.057 as at 12pm.