Ching Lee Holdings Limited, HKG: 3728 (Ching Lee or The Group) entered into definitive joint venture agreements (1) with five partners(2) in early April and has agreed to set up a Project Company(3), with a proportional contribution of HK$24 million to share in the form of 20% equity, jointly invest about HK$112 million to acquire the land in To Kwa Wan, and plan to develop into commercial and residential properties.
After participating in the AVA228 residential project in 2018, Ching Lee has successfully transformed from a builder into a real estate developer of the whole industry chain. The project acquired this time is located at 105 and 105A Pak Tai Street, To Kwa Wan, covering an area of approximately 2,132 square feet. It is planned to be developed into a 19-storey boutique-style commercial and residential complex. The ground and first floors are destined for commercial areas, and the remaining floors are residential. The unit floor area will be in line with the Hong Kong Government’s new policy on “Minimum Flat Size” (4) for residential buildings introduced earlier this year. The acquired project is a combined site, located in the heart of To Kwa Wan which is a mature district and it is well equipped with adequate ancillary facilities. On top of that, the project will achieve a large synergic effect with the adjacent Urban Renewal Authority (URA) projects and has great development potential. In recent years, To Kwa Wan has undergone tremendous changes. Driven by the Government’s launch of the URA’s “Four Projects” (5) which attracted major developers to expand in the area and redevelop old buildings as well as become young people’s new gathering place with a new look. In addition to the opening of the Kowloon-Canton Railway’s the Shatin to Central Link, To Kwa Wan is transforming into a comfortable and convenient living environment, and also becoming more popular with the young generation.
Mr. Ng Choi Wah, Chairman of Ching Lee Holdings Limited said: “We are experienced and skilled in the construction industry and are very excited to discover new property development projects. This is a big step forward for the Group to transform from a builder to a real estate developer. The Group remains optimistic about the Hong Kong housing market and will continue to actively look for further potential property development opportunities.”
The Group has been providing construction, consulting engineering and project management services for more than 23 years. With many years of rich experience in the construction industry, we now provide integrated services for real estate from foundation works and construction engineering to sales. We believe that resource integration can enhance synergies, reduce intermediate business costs and improve project profitability. Successful examples include the residential project “AVA228” on Tai Po Road in Sham Shui Po, which was one of the earliest urban redevelopment projects in Sham Shui Po. The “AVA228” project was completed at the end of 2021 and all residential units were sold, laying the foundation for the Group’s property development milestones.
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Notes to editors:
1. Definitive JV Agreements
On 7 April 2022, Ching Lee Holdings Limited, the Partners and an additional investor, Berrystead Investment, entered into the definitive JV Agreements in respect of the Project Company. From the knowledge of Ching Lee, the Partners have relevant experience and resources to provide financing for the property-related projects held by the Target Company, which will be used to acquire a site project located at 105 and 105A Pak Tai Street in To Kwa Wan from the Chinese-funded developer Wuyi Group and rebuild it into a 19-storey commercial and residential complex building. The maximum capital commitment of the Project Company is HK$150 million. On the same day, the Project Company (as the buyer) entered into a sale and purchase (S&P) agreement with an independent third-party China Expert Development Limited (as the seller) in relation to the purchase of the entire issued share capital of the target company, together with the shareholders’ loan advanced by China Expert Development Limited to the Target Company, for a total consideration of HK$111.5 million. Completion of this S&P agreement is expected to take place on or before 30 days from the date of the S&P agreement.
2. Five partners
Ching Lee Holdings Limited (“Ching Lee”) has confirmed to implement the establishment of the “Project Company” with Primo Holdings Limited, Zun Wang Holdings, RJHK, Gainful Asset Management and Berrystead Investment (partner), respectively owning 20%, 20%, 25%, 20%, 5% and 10% interest.
Ching Lee Holdings Limited, a limited liability company incorporated under the laws of the Cayman Islands, is a contractor in Hong Kong with over 23 years of experience in public and private sectors. The principal activities of Ching Lee Holdings and its subsidiaries are the provision of construction and consultancy works and project management services in Hong Kong, engaged in providing substructure building works services, superstructure building works services, and repair, maintenance, alteration and addition (RMAA) works services. Ching Lee Holdings Limited was transferred from GEM board to the main board in HKEx on September 18, 2017 with stock code HKG: 3728. Company website: http://www.chingleeholdings.com
Primo Holdings Limited, a limited liability company incorporated under the laws of Hong Kong and a direct wholly-owned subsidiary of Sunwah Kingsway Capital Holdings Limited, a limited liability company incorporated in Bermuda and whose shares are listed on the Main Board of the Stock Exchange (Stock Code:00188). It is principally engaged in investment holding.
Zun Wang Holdings is a limited liability company incorporated under the laws of the BVI. It is principally engaged in investment holding. Zun Wang Holdings is ultimately wholly-owned by Mr. Chen JiaHui.
RJHK is a limited liability company incorporated under the laws of the BVI. It is principally engaged in investment holding. RJHK is ultimately wholly-owned by Mr. Jian Weiwen.
Gainful Asset Management is a limited liability company incorporated under the laws of the BVI. It is principally engaged in investment holding. Gainful Asset Management is ultimately wholly-owned by Mr. Chen Weisong.
Berrystead Investment is a limited liability company incorporated under the laws of Hong Kong. It is principally engaged in investment holding. Berrystead Investment is ultimately wholly-owned by Mr. Lee Wai Sang and Ms. Leung Mo Shan Jackie.
Entering into the Cooperation Framework Agreement on 9 December 2021
Regarding the entering into of the Cooperation Framework Agreement on 9 December 2021 by Ching Lee with the Partners in respect of the proposed formation of a joint venture company, the “Project Company”, and the acquisition by the “Project Company” of a Hong Kong incorporated property holding company, the “Target Company”. Under the Cooperation Framework Agreement, Ching Lee and the Partners agreed among other things to negotiate and enter into definitive agreements in respect of the formation of the “Project Company”.
3. The “Project Company”
The Project Company, Empire Elite Group Limited, is a limited liability company incorporated under the laws of the BVI on 12 November 2021. It is principally engaged in investment holding.
The “Target Company”
The Target Company, Front Builder Investment Limited, is a limited liability company incorporated under the laws of Hong Kong on 28 September 1988. The principal activity of the Target Company is the letting of properties for rental income in Hong Kong.
4. The Government’s new policy on the “Minimum Flat Size” requirement
The Government announced on 24 February 2022 that the minimum flat size requirement will be extended to all Government land sale, railway property development projects, projects of the URA, as well as lease modification and land exchange applications by private developers. The prescription that each flat should reach at least 26 sq m (around 280 square feet) in a saleable area aims to enhance living space and respond to society’s wish.
5. Urban Renewal Authority’s “Four Projects”
Four projects include Kai Ming Street Project, Hung Fook Street / Kai Ming Street Project, Kai Ming Street / Wing Kwong Street Project and Wing Kwong Street Project.