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Ying Li discloses take-up rate for Beijing project built amid purchase curbs

PROPERTY firm Ying Li International Real Estate on Wednesday disclosed take-up rates for its investment in the property project New Everbright Centre, which it had said "remains healthy" amid purchase restrictions meant to rein in rising home prices in Beijing Tongzhou.

The take-up rate of Phase 1 construction, consisting of four Soho towers that has been fully completed, was 69.8 per cent. The take-up rate of Phase 2 construction, which consist mainly two office towers and part of a retail podium, was 25 per cent, Ying Li said in response to queries from the Singapore Exchange (SGX).

Ying Li did not specify these purchase restrictions, but it has been reported by South China Morning Post that home purchasers who already have a flat and do not have a household registration, or hukou, in Tongzhou can no longer buy a second home there. To add, only corporate buyers will be able to purchase units at commercial-residential projects. 

Ying Li also disclosed that the "significant interest expense increase" of 27.2 million yuan (S$5.41 million) as flagged by SGX's query, comes from underlying loans totalling 1.45 billion yuan. 

The query comes as the property firm just about doubled its finance costs for the third quarter from the same period a year ago, as it stopped capitalising borrowing costs related to the Ying Li International Commercial Centre that was sold in the fourth quarter of 2017.

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In general, when a company capitalises interest, the interest is added to the cost of a long-term asset, and is reflected on the balance sheet rather than the income statement. As depreciation is applied onto the asset, the expense over the assumed lifespan of the asset - which would then include interest costs - is then reflected on the income statment over the period.

Following the sale of the Ying Li International Commercial Centre, the property firm reported for the three months ended Sept 30, 2018 total finance costs of 54.1 million yuan, doubling from 26.9 million yuan a year ago. 

Just over three-quarters of the 1.45 billion yuan in underlying loans are secured by Ying Li’s retail mall and office properties, and are targeted to be refinanced when due, the property firm said. That leaves about a quarter, or 23.7 per cent, of the underlying loans to be paid up, rather than refinanced.

Ying Li said that the repayment will be funded by the combination of existing cash balance, a gradual paydown of any due loan principal through rental income, as well as sales proceeds collected from sales of properties.

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