Bloomberg News

Swire Says It’s in Talks to Sell ‘Significant’ Property

June 28, 2011

(Updates with details of Mapletree’s Singapore project in seventh paragraph.)

June 28 (Bloomberg) -- Swire Pacific Ltd. said it’s in talks to sell a “significant” property after Sing Tao Daily reported the Hong Kong office and retail landlord may divest of one of its shopping malls for HK$22 billion ($2.83 billion).

Singapore’s Mapletree Investment Pte is in discussions to buy the Festival Walk retail complex in the Kowloon Tong district of Hong Kong, Sing Tao said today, citing a person it didn’t identify.

Swire Pacific “is in discussions which may lead to the disposal of a significant investment property asset,” and will make a further announcement “if these discussions lead to an agreement to make such a disposal,” the company said in a statement to the Hong Kong stock exchange today.

Swire Pacific has been selling its assets after shelving a plan to spinoff its real estate unit last year. Hong Kong overtook Sydney as the world’s second-most expensive city to lease shopping space after rents jumped 46 percent in the first quarter from the previous three months, according to a report by CB Richard Ellis Group Inc.

The sale of Festival Walk, if successful, would be the biggest property transaction in the city’s history, Sing Tao said, without citing anyone.

Swire Pacific fell 0.1 percent to HK$109.70 at the 4 p.m. close in Hong Kong today, extending its loss this year to 14 percent. The Hang Seng Index fell 4.2 percent in the period.

Share Sale

Mapletree Investments, a unit of Temasek Holdings Pte, Singapore’s state-owned investment company, said in an e-mailed statement that it declined to comment on the report. May Lam, a Hong Kong-based spokeswoman for Swire Pacific, also declined to comment.

Mapletree Investments has teamed up with Malaysia’s UEM Land Holdings Bhd. in a downtown Singapore development that’s part of an S$11 billion ($8.9 billion) project which will include malls, apartments and offices, Temasek said yesterday.

Completed in 1998, Festival Walk sits on top of the Kowloon Tong subway station on the Kowloon Peninsula. The more than 1 million-square-foot mall features tenants including clothing brands Calvin Klein and Giorgio Armani and department store Marks & Spencer. It has 220,000 square feet of office space.

Swire Properties Ltd., the company’s real estate unit, in 2010 shelved its plan to raise as much as HK$20.8 billion in an initial public offering in Hong Kong. The decision was made after considering “the deterioration in market conditions,” the company said in a statement last year.

Pacific Place

The landlord to Societe Generale SA and Time Warner Inc. owns commercial complexes such as Pacific Place and Island East.

The company in November sold a 50 percent stake in the PCCW Tower at Taikoo Place, on Hong Kong Island, to property and fund management group Grosvenor Group Ltd. for a gain of HK$342 million. It also made a profit of HK$771 million from the sale of its interest in Crown Beverage Cans in September.

The company, which controls Hong Kong’s biggest carrier, in 2006 bought the 50 percent of Festival Walk it didn’t already own from Citic Pacific Ltd. for HK$6.18 billion.

Created as a trading company in London in 1816, Swire Pacific also bottles Coca-Cola in China and supplies offshore oil rigs.

Mapletree Investments owns the HabourFront Centre in Singapore, as well as the St. James Power Station entertainment complex in the city-state. It sold shares of its Mapletree Commercial Trust two months ago. The trust owns VivoCity, one of the island’s biggest shopping malls.

--Editors: Andreea Papuc, Linus Chua

To contact the reporter for this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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