Singapore/Hong Kong, 10 December 2010 – Treasury Holdings Real Estate Pte. Ltd., trustee-manager of Treasury China Trust (“TCT), today announced the successful issue of 16,095,047 new units by way of a private placement raising gross proceeds of SGD26,717,779 to partially fund the proposed acquisitions of Central Avenue Mall in Qingdao and Retail Mall in Shanghai.

With approximately RMB10.0bn of quality commercial real estate assets under management, TCT – which was listed in Singapore in June of this year – is making a targeted expansion into China’s fast moving retail property sector. This is an area that TCT has significant experience in, with the 60,000sqm City Center retail mall in Shanghai a strong performer within its existing portfolio and currently being expanded to more than 100,000sqm.

CEO Richard David commented, “It is clear that the last decade has continued to witness significant economic reform across China, with the country deepening its industry expansion and quality of output. Furthermore, from recent actions and pronouncements, it is clear that the government has embarked on a program to create a stronger domestic component of the national economy and has implemented policies to encourage greater domestic consumption. In this context, TCT will focus on the retail sector of the commercial real estate industry in China, and we are very pleased to report a strong take-up for the private placement yesterday, which will underpin our expansion plans.”

The Private Placement, amounting to 6.7% of the original share capital, was undertaken at the price of SGD1.66 per unit which represents a 9.2% premium to the volume weighted average price of SGD1.52 per unit for the 10 trading days prior to 9 December 2010. The placement, which attracted both existing and new investors, was substantially oversubscribed. Neither Treasury Holdings nor any related entities took part in the placement.

The proceeds will partially fund the proposed purchase of a 55% interest in Central Avenue Mall, which is located in the heart of the Laoshan District, the Central Business District of Qingdao, in China’s eastern coastal province of Shandong. The agreed property price is RMB867.0 million (SGD170.33 million), which equates to RMB476.85 million (SGD93.68 million) for TCT’s 55% share. 

Central Avenue Mall comprises an existing 43,463sqm gross floor area (GFA) shopping mall, with occupancy rate of 98%, and three adjoining cleared sites zoned for retail development, totalling a further 170,500sqm of potential GFA, which is expected to be developed as three separate projects by 2015.  It is the centrepiece of a government public works initiative to link the District’s newly completed government precinct with an exclusive beachfront property to the south via a 1.3 km open air pedestrian corridor that will feature Central Avenue Mall as its primary commercial component.

In August 2010, TCT announced a Strategic Partnership Agreement with the TRIO Group to expand into China’s Shandong province. TRIO Group has been operating in Qingdao and other parts of the Shandong Province with great success for over 15 years and has developed more than 20 high quality real estate projects totaling in excess of three million square meters, predominantly in the residential sector. TCT’s proposed acquisition of a 55% interest in Central Avenue Mall represents the first of what the company hopes to be many investments made under the Strategic Partnership Agreement.

“The TRIO Group is a thoroughly professional and very experienced team. The quality of our first joint investment, the Central Avenue Mall, speaks volumes of the value-add that TRIO brings to the table. We maintain very high expectations for a strong relationship for many years to come,” David confirmed.
These monies will also partially pay for the 100% acquisition of a prime retail property in the heart of the Shanghai luxury goods retail precinct. The agreed property price is RMB575.0 million (SGD112.96 million)

“Shanghai remains a very strong retailing environment and this acquisition, which will focus on high-end luxury goods, will complement TCT’s existing Shanghai-based commercial real estate portfolio,” remarked the CEO.
The balance of the costs for both acquisitions is expected to be funded through bank debt and the issuance of a convertible bond. The acquisitions provide immediate net asset value per unit accretion of 6.65% and a further 9.6% upon completion of the Central Avenue Mall development.  Both acquisitions are expected to be completed no later than March 2011.

Richard David further commented, “TCT will remain exclusively focused on China’s fast growing commercial property sector, with an emphasis on regional expansion whilst maintaining core representation in Shanghai, China’s largest market. TCT has built a profile and reputation within the Chinese commercial real estate market as a quality developer and owner/manager with proven capability to improve asset performance as evidenced by the recent refurbishment of our Central Plaza asset and improved occupancy and operational efficiency across our portfolio.”