Metro Holdings

[Boon]

i bet they mostly likely able to renew the lease.
property lease be it residential or commercial are short term in nature
there are many more residential property even nearer the end of their lease...does it mean the people will get chased out?

Anyway, its a bit premature to talk about the lease now right?
Here are the 5 properties and when their leases run out.

EC Mall, Beijing 50 year term from 2001 (2051)
Metro City, Shanghai 36 year term from 1993 (2029)
Metro Tower, Shanghai 50 year term from 1993 (2043)
GIE Tower, Guangzhou 50 year term from 1994 (2044)
Frontier Koishikawa Building, Tokyo Freehold

Earliest is 2029, 15 yrs away.
Kinda early to be speculating about whether leases will be renewed. China in 15 yrs will be a very different animal.
Obviously management feels confident enough to do a major refurbishing works for their properties currently, taking a short term hit in earnings and rentals to maximise longer term returns.

I noticed that Metro’s 60% interests in Shanghai Metro City and Shanghai Metro Tower are held through “joint controlled entities”.

I have seen JV with term of 20 years only (shorter than the land tenure of the properties owned) and was not renewable - with foreign interests in the JV revert to the Chinese partner at expiry.

Hence, the terms or contractual agreements of the JV are also critical

Not sure on the disclosure standards/requirements on these JV interests.

If you are the Chinese JV partner , will you extend the lease agreement or take 100% ownership after the expiry of lease ?

The terms of each JV are different - here is another case between LKN and its JV partners on the Shanghai Equitorial hotel

2.1 Joint venture in relation to SIEH
LKNII and SIVCC (the "JV Parties") had entered into an agreement dated 29 October 1986 (the "Hotel JV Agreement") to jointly invest in, construct and manage the hotel known as "Equatorial Hotel Shanghai" (the "Hotel") in Shanghai, The People’s Republic of China ("PRC"). Pursuant to the Hotel JV Agreement, the JV Parties had established SIEH as a joint venture company to undertake the construction and operation of the Hotel. Each of the JV Parties holds a 50% equity interest in SIEH. Under the Hotel JV Agreement, the duration of SIEH was originally stipulated to be 20 years, but it had been extended by the JV Parties until 20 November 2013. The Hotel JV Agreement provides that upon the expiry of the duration of SIEH, SIEH shall be liquidated in accordance with PRC laws and the Hotel JV Agreement (unless the duration of SIEH is extended by the JV Parties).

http://www.finanznachrichten.de/pdf/2012...73E4.1.pdf