Shanghai-headquartered conglomerate to create new listed management entity

Shanghai-headquartered Shui On Land Limited, the flagship property arm of Shui On Group on the Chinese mainland, announced a proposed spin-off and separate listing of its commercial investment properties, property management and asset management businesses, which will be operated under a standalone entity, Shui On Xintiandi (SXTD).

SXTD has submitted an application for listing on the main board of the Hong Kong Stock Exchange, while Morgan Stanley and UBS have been appointed as the joint sponsors in the proposed spin-off, the company said in a press release on Monday.

"This proposed spin-off is a major step that we have taken after a rigorous review of various options to create value for our many stakeholders, including our shareholders and employees," said Vincent Lo, chairman of Shui On Land. "We intend to unlock the value of the group's assets, to provide significant future growth opportunities for both Shui On Land and Shui On Xintiandi, and to enhance shareholder value over time."

The separate listing of SXTD is expected to create two independent publicly-traded companies with distinct business models, unique growth strategies and compelling investment rationales, according to Shui On, which is best known for its Xintiandi project in Shanghai, a 20-year landmark development remodeled from shikumen (stone gate) neighborhoods combining culture, lifestyle, dining and fashion outlets in downtown Huangpu District.

Under the plan, Shui On Land will continue its focus on the master plan and development of mixed-use communities and properties as well as the sale of developed properties at such communities, while a portfolio of the company's 13 completed commercial assets, including Shanghai Xintiandi, will be transferred to SXTD. The new company will be primarily engaged in the investment in and ownership of commercial properties as well as property management and asset management in China.

Shui On Land, which reported last month a strong rebound in both revenue and profit for the first half of 2021 amid robust residential sales as well as rental income growth, will remain a controlling shareholder of SXTD after its separate listing.