Weifang, People’s Republic of China, 26 April 2011
Euro Asia Premier Real Estate Company Limited (ISIN: VGG3223A1057, ISIN: VGG3223A1131) today provides shareholders with an update of certain of its existing projects.
Patrick Chan, Vice Chairman for Euro Asia, stated, “The strength of the local economy and our position in the Weifang market have allowed us to develop our business model such that we have been able to accelerate shareholder value creation by pursuing low risk, high return projects. We have worked diligently on expanding our project portfolio and structuring this expansion in such a way that we are actually strengthening our financial position, rather than compromising it by taking on external debt.”
On November 29th, 2010, the Company announced it had entered into a non-binding agreement with regards to the sale of the German Hotel. On April 15th 2011, Euro Asia completed the sales agreement for the German Hotel. We have currently received a good faith refundable deposit of RMB 8 million (approx. Euro 0.83 million), and will receive an additional RMB 2 million (Euro 0.21 million) by the end of April, 2011, at which point in time, the entire deposit becomes non-refundable. The remaining purchase price balance of 62 Million RMB (Euro 6.5 million) will be received in two instalments of RMB 30 million (Euro 3.1 million) on or before April 15th 2012, and RMB 32 million (Euro 3.3 million) on or before October 15th, 2012.
Cloud Lake Training and Exhibition Center
The curtain wall of the Training and Exhibition Center has entered its final stage and is nearing completion and internal improvements have commenced. Furthermore, negotiations with a hotel management company concerning the formation of a Joint Venture are continuing. Under the current framework, NIW’s capital investment into project will be transferred to the joint venture partner in return for a fixed fee plus a to be negotiated percentage of gross and/or net income, along with the hotel’s management rights. In return, the partner will invest into the lease hold improvements of the hotel, estimated at RMB 120 million (Euro12.6 million), and act as its operator. We estimate the management contract negotiation will be completed in May, 2011 as opposed to March, 2011 and that contract is to commence in July, 2011.
China Agricultural Machinery Marketing Center
Site preparation at the China Agricultural Machinery Marketing Center continues and a presale permit is expected to be received upon completion of Phase 1 outer structure, in June, 2011.
Euro Asia has already received preliminary letters of interest from four anchor tenants and we expect this interest to translate into a purchase commitment in June, 2011. In regards to the additional 333,333.5 m2 of land adjacent to the site for phase II, Euro Asia expects negotiations to be completed and land permits received by September 30th, 2011 as opposed to March, 2011. This delay is due to continuing negotiation over the land price and plot ratio for phase two. Negotiations are in line with the original estimates for a purchase price of less than RMB 175 million (Euro 18.3 million).
Luxury Town Houses at Juilongjian
Of Euro Asia’s 200,000 m2 of land bank at the Juilongjian country park, we expect to complete land permits documentation for 100,000 2 by the end of June, 2011. The current plan is to develop 100 luxury town houses on the site at approximately 400 2 GFA each. With preliminary designs currently under way, we expect construction to begin as previously announced in August, 2011 and we plan to have this project completed and sold by the fourth quarter of 2012. With regards to the remaining 100,000 2, construction permits are expected by October, 2011. Euro Asia plans to build a further 100 town houses on the additional site. The selling price, size of unit, design and the timing of the construction of the second phase is still subject to the pace at which the first half sells.
Euro Asia Apartment Buildings
Euro Asia has to date received a total non refundable deposit of RMB 10 million (Euro 1.0 million) as opposed to a good faith deposit of RMB 2 Million as at December 31st, 2010. The balance of another 10 million RMB will be received upon commencement of construction. We have currently paid the full RMB 15 million (Euro 1.6 million) for the site to SNI.
Euro Asia has also received first round feedback from relevant departments on the preliminary design of the Euro Asia Apartment Buildings. The height of the building has been reduced by 20 meters, fixing the height at 61 meters or 11 stories. The adjusted GFA is 18,400 m2 with the apartments in split level design. The design changes are expected to receive approval comments by the end of May, 2011. Under this revised timeline, construction is to start by July, 2011 with pre-sale commencing in October, 2011.
This reduction in zoning density is offset by an increase in targeted sales price and will adjust the gross sale of the building to RMB 150 million from RMB 170 million (Euro 15.7 and 17.8 million) and Euro Asia’s participation in the venture to RMB 50 million as opposed to RMB 60 million (Euro 5.2 and 6.3 million) net as previously announced on December 8th, 2010.
Cloud Lake Apartments
The preliminary planning process was completed on April 1st and we have submitted a revised plan for approval to the relevant authorities. This revised plan increases the expected height of the venture from 19-24 stories to 26-30 stories with an increase in the expected GFA to 103,000 m2 , an increase of 23,000 m2. The gross proceeds from this venture are now estimated to increase RMB 424 million from RMB 340 million (Euro 44.4 and 35.6 million) as announced in January 13th, 2011. We expect planning for these buildings to be approved of in May, with initial construction to commence at the end of September, 2011 and its completion by June 2013.
Qing Zhou Apartments
We are still negotiating with a Joint Venture Partner, and have submitted preliminary site plans and are still waiting for feedback. We expect that the general terms with the joint venture partner will be as announced on February 16th, 2011 concluded by approximately June 30th, 2011. The initial targets announced in February, 2011 remains unchanged.
Patrick Chan, Vice Chairman for Euro Asia, concludes, “As we can see from this update, there are minor changes in planned developments when compared to previous announcements. These changes will result in no material difference to our forecasted earnings in 2011.”
Euro Asia to Present on Deutsche Boerse Conference in Frankfurt
In order to update investors, analysts and media about the recent development of the company, Management is pleased to inform that Euro Asia will be presenting at the Entry & General Standard Conference of Deutsche Boerse AG on May 4th, 2011 at 09:45 a.m. Please contact Euro Asia’s investor relations consultant if you wish to meet the management one-to-one, for contact please see below.
* Conversion rate: RMB 1 = Euro 0.105
About Euro Asia
Euro Asia is a BVI registered company, active in real estate development in the Shandong area of the People’s Republic of China. The Company operates locally through its subsidiaries, jointly owned with SNI, a leading local development company. Generating leasing revenues from a number of commercial properties, the Company has a number of other projects under development. By utilizing its strong local network to banks, political decision makers, land owners and other developers, the Company intends to grow its position in the region prior to moving into other prefecture-level cities.