Last checked at 5 Nov 2008 07:00
5 November 2008
China Real Estate Opportunities Limited
Business Update
China Real Estate Opportunities ("CREO" or the "Company"), an AIM listed property company with an established investment and development property portfolio in China, today provides an update on the Company's trading since 1 July 2008.
Investment Highlights:
Strong Income Producing Portfolio Continues to Outperform
CREO's income producing assets, which represent 75% of the Company's total portfolio, have continued to perform strongly in the third quarter. Three year rollover on leases, which is standard practice in China, has enabled the Company to continue to drive income growth in the short to medium term.
Office: CREO achieved between 10% to 50% rental income growth from lease renewals and new leases since 1 July 2008.
Occupancy rates in the investment assets remain strong:
Central Plaza: 92%
City Center: 95%
Treasury Building: 97%
Retail: CREO has completed 21 lease renewals and new leases since 1 July 2008, and has achieved up to 40% increase in rents on individual transactions and an average of over 16% growth from letting transactions in the period.
Development Highlights:
CREO's development programme continued to make progress throughout the period
Beijing Logistics Park: construction is due to commence in November 2008. Completion of this development project is expected in 2009, and the Company has already received strong leasing enquiries.
Central Plaza: office tower refurbishment work is on schedule for completion before the end of 2008 while the remainder of the refurbishment programme is on track for completion in 2009.
City Center: short-term refurbishment work will be completed in Q1 2009.
City Center Extension (formerly referred to as CC3): the design and planning process is proceeding as outlined earlier this year.
City Center Development (formerly referred to as CC5): on track to commence in the current quarter.
Financing
The maturity profile of CREO loans secured against its investment properties remains unchanged with all existing loans locked in until Q3 2010.
In addition, CREO has recently secured a new development loan facility from DBS Bank in relation to the construction of its Beijing Logistics Park development.
The Chinese Market: Robust Office & Retail Markets
China's annualised GDP growth in the quarter to September 30 was a strong 9.0%(1) and 9.9% for the year to date(1), highlighting considerable continued momentum and although the prospects for the China economy are not immune to the deteriorating external environment, this growth trend represents a strong foundation for China to weather the current economic upheaval.
China's retail sales increased by 22% in the last nine months(1), underpinning continued strong demand for retail space. In addition, the Shanghai retail rental market continued to enjoy a buoyant performance with growth of 5.7% quarter on quarter, whilst vacancy rates were down by 0.4% in the quarter as demand, in particular from international retail, continues(2).
Shanghai prime office rental performance was stable overall in Q3, following the impact of considerable additional supply in recent months which led to an increase in market vacancy rates(2) during the quarter. Within this context, the CREO portfolio has delivered a strong performance, evidenced by maintained strong occupancy and rental growth in the last quarter.
"During this period of unprecedented market volatility and uncertainty seen in global equity and debt markets, the focus of CREO Directors has been to continue to manage its assets intensively and deliver growth. As a result, the business has continued to perform strongly in the period. CREO's income producing portfolio continues to see significant uplifts in rental income arising from rental reviews and new lettings, reflecting a resilient rental market."
"Activity in the CREO development portfolio continues at pace as construction of the Beijing Logistics Park is about to commence and the planning process for the City Center Extension development is underway. The Company is positioned to continue to perform well in the short and medium term.", commented Ray Horney, CREO Chairman.
(1) PRC National Bureau of Statistics
(2) CBRE China, Q3 2008 MarketView
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Contact:
CREO
Ray Horney, Chairman
Tel: + 44 (0)1273 775225
Sarah Moriarty, Investor Relations
Tel: +353 1 6189455
Davy
Des Carville
Tel: +353 1 679 6363
Bankside Consultants
Simon Rothschild, Oliver Winters
Tel: + 44 (0)207 367 8888
Murray Consultants
Ed Micheau
Tel: + 3531 498 0300