Gemdale Hangzhou Property Brings in Credit Suisse

SHANGHAI, Sep 29, 2008 (SinoCast China Financial Watch via COMTEX) -- GMDCF | Quote | Chart | News | PowerRating -- Gemdale Corporation (SHSE: 600383), one of the top four real estate developers in China, is bringing in Credit Suisse into its property projects in Hangzhou city after it failed in a CNY 8.5 billion seasoned equity offering.

Credit Suisse will take about 20 percent equity in each of the Hangzhou projects.

In the meantime, Gemdale Corp. is in talk to bring in foreign fund into its residential property in Nanjing city.

Statistics from the National Bureau of Statistics show that China's real estate developers got CNY 170.3 billion loans in the second quarter, down 28 percent than the previous quarter. By constrast, the utilized foreign investment surged 126 percent to CNY 24 billion.

It seems the Shanghai-based real estate developer's primary mission to bring in foreign investment after its maximum CNY 8.5 billion seasoned equity offering plan did not pass China Securities Regulatory Commission late in July.

The company had planned to use the proceeds to fund its development of 15 properties and repay part of loans.

Gedmale Corp. had over CNY 20 billion credit line as at the start of August, of which about CNY 6 billion portion unused. Moreover, it shall pay CNY 1.9 billion for the lands it has bought. Given the seasoned equity offering was launched, it could make the payment.

Foreign investors such as UBS, ING, Morgan Stanley and CapitaLand Ltd. are rushing into the mainland real estate market this year by forming partnerships with local real estate developers including Gedmale Corporation and Guangzhou R&F Properties (SEHK: 2777).

Gedmale Corp. will seek opportunity for seasoned equity offering half a year later, said Zhao Hanzhong, general manager of Gedmale Corp. Shanghai branch. All of the proceeds will be used to buy lands, but the company would not buy more lands in the Yangtze River Delta this year.

Zhao expected the domestic real estate market would start picking up in a year.

Credit Suisse forecast in a report that the mainland property prices would further go south and believed the Chinese government would not loosen the macro control directly in a short term.

It predicted the mainland property prices would fall 15 percent in 2008 and slide another 5 percent in 2009 before getting stable in 2010.

Some large real estate developers are reported to seek opportunity to merge small rivals amid the wild correction.

(USD 1 = CNY 6.81)

From dycj.ynet.com, Page 1, Friday, September 26, 2008 info@SinoCast.com

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