Weifang, People’s Republic of China, 13 January 2011
Euro Asia Premier Real Estate Company Limited (ISIN: VGG3223A1057, ISIN: VGG3223A1131) today announced that the Company plans a new residential development on its already owned site on Cloud Lake. This project will be adjacent to the Yunhu Holiday Hotel and Cloud Lake Training and Exhibition Centre just outside Anqiu City in Shandong Province.
The development, located on the lake shore, will consist of six apartment buildings. The parcel of 103,437 m² land was appraised by DTZ at approximately RMB 150 million (Euro 17 m*) in 2009 and is recorded at nil value on the balance sheet of Euro Asia at IPO. Once construction and zoning permits have been received, appraised value of this parcel of land is likely to increase due to additional defined plot ratio.
The plan is to develop a total GFA of 80,000 m² with an additional 500 parking spaces on 20,000 m² of the site. The company estimates the total construction costs for the project at around RMB 144 million (Euro 16 m), which will be financed internally without debt.
The initial plans for this project have been submitted to the relevant government departments for construction/zoning permits, which the Company expects to receive by January 31st, 2011. Construction for the project is expected to commence around March 31st, 2011 and be finished by the end of 2012. The Company has also signed a preliminary pre-sales agreement with a third party purchaser for two of the six buildings for a total of RMB 95 million (Euro 10 m) for 27,000 m².The purchaserhas agreed to pay an initial deposit of 30% or RMB 28 million (Euro 3 m) by March 31st, 2011, a further 20% or RMB 19 million (Euro 2 m) upon completion of the super structure, expected by September 30th, 2011, and the balance of 50% or RMB 47 million (Euro 5 m) when the title is passed upon completion.
Patrick Chan, Vice Chairman for Euro Asia, stated, “This proposed project fits very well with our strategy to develop up-scale housing at prime locations. The Cloud Lake area is very scenic and being able to provide lake side property only increases the demand. Although slightly different in nature from the signature deals announced recently, as we are taking on the entire development ourselves, by signing a pre-sales agreement, we still manage to reduce our risk exposure. This is a very attractive project for our company and the returns from this will allow us further to accelerate shareholder value creation.”
The expected retail price of the remaining 4 of buildings is around RMB 205 million (Euro 23 m). Parking spaces will retail at RMB 80,000 totalling RMB 40 million (Euro 4.55 million). After construction costs, Euro Asia expects a pre-tax gain of around RMB 195 million (Euro 22.17 million). Sales are expected to commence around May 31st, 2011 and the project is expected to be sold within 12 months. The Company calculates to collect 20% of proceeds in October 2011, a further 30% of proceeds until December 31st, 2011, and 10% per month from January to May 2012.
* Conversion rate: RMB 1.00 = Euro 0.11