Weifang, People’s Republic of China, 08 December 2010
Euro Asia Premier Real Estate Company Limited (ISIN: VGG3223A1057) today announced that the Company has entered into a Definitive Sales and Purchase Agreement for the transfer of the land purposed for a residential development in the Kuiwen district in Weifang City, the city’s economic heart. This furthers the cooperative agreement between Euro Asia and Shangdong New Industries, Co. (SNI).
The site consists of 3,623 m², with a planned construction area of 32,572 m² for mixed residential and commercial use, as well as parking space. The total purchase price is RMB 15 million (Euro 1.7 million), payable by Euro Asia’s subsidiary Weifang Xinpu Industrial Co. Ltd. by January 31st, 2011. Euro Asia has agreed terms with a prospect a joint venture partner who will assume all development costs of this project, estimated at just under RMB 59 million (Euro 6.7 million). In return, the partner will own 50% of the joint venture. Additionally, the proposed joint venture partner will pay RMB 20 million (Euro 2.3 million) to Euro Asia for its land contribution.
Patrick Chan, Vice Chairman for Euro Asia, stated, “This is an exciting new project for us. Firstly, as we stated upon going public, we are building a strong project pipeline through our close relationship with SNI. This particular project is an ideal fit for us as it meets the need for both residential accommodation and commercial space in the economically vibrant core of Weifang City.”
“Furthermore, by signing up a joint venture partner under the terms agreed, we significantly reduce our risk of exposure and at the same time are ready to start building as soon as the required state permits have been received. In this way, we accelerate cash flow generation and build further value into the company. Kuiwen is a signature deal for us, with two similar projects that are currently under negotiation.”
The prospect partner to date has paid a RMB 2 million (Euro 230,000) good faith refundable deposit. The RMB 18 million (Euro 2.0 million) balance will be paid by January 15th, 2011. Euro Asia expects total sales of the units in the development to total an estimated RMB 170 million (Euro 19.2 million). Construction will commence March 2011 and be completed by June 30th, 2012. Pre-sales are expected to commence in May 2011 and the project is expected to be fully sold by December 2012. Euro Asia’s estimated pre-tax gain is RMB 60 million (Euro 6.8 million).
Patrick Chan concluded: “With our annual rental income and proceeds from deals currently under negotiation, we expect to increase Euro Asia’s net pre-tax profit from an expected RMB 111 million (Euro 12.6 million) in 2010 to RMB 275 (Euro 31.2 million).”