China Real Estate today released a trading update prior to the release of their annual results for the 12 month period ending December 2009.
The Board announced that the aggregate gross value of the the portfolio, as of the end of December 2009, was GBP£837 million. These valuations were carried out by an independent body, DTZ Debenham Tie Leung, in accordance with the RICS standards. The valuations represent a 4% increase in local currency terms (7.35% in sterling terms) since the end of June 2009.
The AIM-listed China Real Estate Opportunities aims to achieve capital growth from a portfolio of properties in China. Focus is on large-scale development opportunities for income-producing assets such as office, logistics and retail properties. The investment portfolio is concentrated on the commercial rather than the residential sector and geographically, the focus is on Shanghai and Beijing. The Company was listed on the AIM market in London on the 11th July 2007.
The Company admitted the year ending Dec 2009 was challenging, due to high vacancy rates in Shanghai, peaking at 14.2% in Q1. The retail sector, in contrast, reportedly remained strong as a result of Chinese consumer confidence.
55% of the Company's expired leases were renewed over the year, of the remainder 15% were moved out of their premises due to refurbishments. 28% of lease expiries entered into leases with MetLife Insurance, Prudential Insurance and Johnson and Johnson. Over the year, the occupancy rate for the portfolio totalled at 85%, a 6% fall in last years numbers. However, gross rental income per square metre increased.
The company has made two disposals during the year, including the 5% interest in City Centre 5, disposed of for an 8.9% premium over valuation and the 50% interest in Tangdao Bay, disposed of in for a 10.9% premium over valuation. The company has also sold its 60% shareholding in RREEF China Commercial Trust to generate a 20% return on acquisition price.
As of December 2009, China Real Estates cash holdings totalled £75million.
Going forward, the Board expect to meet its refinancing obligations for 2010 subject to the completion of a loan facility with CITIC Ka Wah Bank.
