Keppel Land China has formed a joint venture with Gemdale Corp. to jointly develop an 8.8-ha prime residential site in Nanjing, China.
The collaboration marks Keppel Land China’s first foray into Nanjing and further expansion in the Yangtze River Delta region.
Keppel Land China has entered into a share purchase agreement (SPA) with Gemdale Corp. through its wholly-owned subsidiary Gemdale Corporation Nanjing Real Estate Development Co. (Gemdale Nanjing) and the latter’s related nominee to acquire all of the shares in Eternal Commercial (Eternal). Completion of the SPA is subject to the fulfilment of certain conditions and is expected to take place by Sept. 25, 2018.
Eternal holds an approximately 40 percent stake in Nanjing Jinsheng Real Estate Development Co., a project company incorporated to undertake the proposed development of the prime residential site. The remaining 60 percent stake is held by the Gemdale group of companies.
The aggregate consideration for the acquisition of Eternal and its 40 percent stake in Nanjing Jinsheng is approximately RMB1.4 billion ($210 million), payable in tranches, with final payment expected to take place in fourth quarter 2018.
Nanjing is the provincial capital of Jiangsu and enjoys strong economic growth with GDP growing by 8.1 percent to RMB 1.17 billion ($170 million) in 2017, the second highest in Jiangsu Province. With a population of 8.34 million, it is the second-largest city along Yangtze River after Shanghai.
The site is located at the core of the Nanjing Jiangbei New Area, which is the only national-level new area in Jiangsu Province. The site has a permissible gross floor area (GFA) of 193,139 square meters (2.08 million square feet). The proposed development will comprise 1,728 units of high-rise apartments and 50 units of street-front shops. Phase 1, comprising 787 units, is expected to be launched in fourth quarter 2018 and the entire project will be completed in second quarter 2022. The estimated total development cost for the project is expected to be in excess of RMB5.2 billion ($761 million).
The site enjoys proximity to major transport nodes with good connectivity to the Nanjing city center. It is a 15-minute drive away from Hexi CBD and 30-minute drive away from Nanjing city center. It is also within a 5-minute walk to a new Metro Line 11 station, which is expected to start operation in 2021.
The site is also well supported by amenities, including the upcoming Jiangbei Wonder City, a regional shopping mall, Gulou Hospital Jiangbei Branch, and Nanjing No.1 Middle School, one of the top middle schools in Nanjing.
The above transaction is not expected to have any material impact on the earnings per share and net tangible asset per share of Keppel Corporation Limited for the current financial year.
