Continental Holdings quits mall holding

Hong Kong-based jewellery trader Continental Holdings is quitting its main property investment in Mainland China by selling its 50 per cent stake in Shanghai shopping mall Bauhinia Square for about HK$1.31 billion (US$167 million).

Under the terms of the deal, the company will offload its interest in the Yangpu district mall to its JV partner A Glory Communications, said to be controlled by Hong Kong toy entrepreneur Francis Choi, who will take over responsibility for a shareholder loan owed to Continental Holdings by the JV.

Above a metro station, the 11-storey mall and its 500 parking spaces was completed in 2015. It has 98,881sqm of gross floor area and a retail mix including F&B outlets, lifestyle and fast-fashion stores, children’s education, a cinema and a supermarket. It is believed to be almost fully leased out.

Continental Holdings expects a gain of about $439 million from the sale before tax and expenses. “The disposal is a good opportunity for the group to realise its investment,” says a company spokesperson. The sale proceeds will be used to reduce the company’s borrowing and improve working capital.

After acquiring the 18,101sqm site, the JV partners started foundation work on the building in early 2011.

The latest annual report says rental revenue was stable and double-digit growth had been achieved since the mall’s opening. Net after-tax profit was $246 million in the year to the end of June.

Continental Holdings has branched out from its core business of designing, making and distributing fine jewellery to invest in real estate in Hong Kong and the mainland. In July, the firm agreed to buy land from Phoenix Property Investors in Hong Kong’s Wanchai district for $1.18 billion, where it will develop a 25-storey office and retail building.

That acquisition followed the conglomerate’s sale of Continental Place, a 29-storey commercial building it had in the Causeway Bay retail hub, for a total of about $1.13 billion.

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