CITIC to sell property assets to China Overseas Land for US$4.8b

[HONG KONG] Chinese conglomerate CITIC Ltd said on Monday it will sell its residential property business in the mainland to China Overseas Land & Investment Ltd for 31 billion yuan (S$6.6 billion), as it focuses on commercial property.

China Overseas Land would settle part of the deal through the issue of HK$29.7 billion (S$5.2 billion) worth of new shares, while the remainder would be paid with the transfer of 6.15 billion yuan worth of property portfolios to CITIC, the state-owned developer said in a separate filing to the Hong Kong stock exchange.

CITIC said the combination of its commercial real estate assets and those of China Overseas Land, once transferred to the conglomerate, would further strengthen its commercial property business in China.

The group would retain its exposure to China's residential market through a roughly 10 per cent stake in China Overseas Land. "The transaction will enable the company to focus on commercial real estate, particularly large integrated projects," CITIC Chairman Chang Zhenming said in a statement.

As part of the deal, China Overseas Land would issue 1.095 billion new shares at HK$27.13 apiece, representing a 5.36 per cent premium over the stock's previous closing price.

CITIC would become China Overseas Land's second-largest shareholder on completion of the deal, which was subject to shareholder and regulatory approval.

Shares of CITIC were down more than 2 per cent on Monday, while shares of China Overseas Land were up 2.3 per cent. The benchmark Hang Seng Index was up 0.7 per cent.

REUTERS