November 05, 2013

CPG signs MoA to take a stake in Okada firm

In a disclosure to the Exchange, Century Properties Group Inc (CPG, Not rated) said it has signed a memorandum of agreement with Eagle Landholdings to take a 36% into the latter by acquiring voting preferred shares to be issued by the company.

Another 24% will be acquired by First Paramount Holdings 888 Inc. CPG did not mention any amount for the investment pending the closing of the transaction and upon meeting the legal and regulatory requirements. As per the initial agreement, CPG will develop 5 hectares out of the 40-hectare property that the Okada group plans to turn into an integrated entertainment and leisure complex.

CPG also clarified that it will not be involved in the gaming operations and will focus on developing high-end residential and retail buildings with more than 300,000 sqms in gross floor area.

Our take: Based on our initial discussion with CPG, it intends to finance the investment and the development of the property through internally funds and additional debt if needed. As of end-June 2013, CPG’s net gearing stood at 20%.

While we do not expect the market to be excited about CPG’s exclusion from the gaming business, we believe that taking a stake in project will provide CPG an easy access to landbank in a potentially prime area. The company can count on its long track record in successfully building and selling high-end residential units while its entry into retail operations should also diversify its revenue sources. – WealthSec