Now Nam Van tinged by land swap debacle
The operator of the Lan Kwai Fong Hotel and Casino in Macau, China Star Entertainment Limited, has entered into an agreement to purchase up to a 50 per cent stake in a land plot in Nam Van granted as a land swap in August 2001 through the auspices of disgraced former Secretary of Transport and Public Works Ao Man Long.
The announcement was made in a filing with the Hong Kong Stock Exchange by China Star, a group also involved in property development, film production and distribution, artist management services, health products and more.
‘The recent overall performance of the hotel and gaming operations in Hotel Lan Kwai Fong is susceptible to the surrounding region, government regulatory policies and the level of visitation to Macau, as well as the competitive situation among hotels in Macau. Property development and investment is considered a more stable investment for maintaining stable future revenue,’ says the group in the filing.
The land plot in question is ‘being developed into a luxury residential and commercial complex of two towers, with a total gross floor area of 455,989 square metres,’ notes the filing, commenting that the development is ‘expected to commence’ at the beginning of 2017 and be completed in 2019.
However, according to the original land grant, the property in question had been leased to Macau Co for a term of 25 years, commencing on 22 August 2001, which ‘subject to the completion of the development’ could be renewed automatically in 10-year periods until December 2049.
The problem being that: ‘the development of the Property should have been completed within a term of 60 months commencing on 22 August 2001, i.e. until 21 August 2006,’ the filing notes. The development was not completed, justified by the group as being due to the ‘pending of the finalization by the Macau Government of the master plan for the development of the Nam Van District, of which the Property comprises a portion’.
Given that the Land, Public Works and Transportation Bureau (DSSOPT) ‘has not granted a permit for the development of the Property,’ as noted in the release, ‘the Development Period has expired’.
However, given that the original lease term of the property has yet to expire, ‘the Company’s Macanese lawyers are of the opinion that […] they do not foresee any legal impediment […] to apply for an extension of the Development Period or obtaining the New Development Period within the lease term of the property’.
The group’s total consideration for the stake in the property amounts to HK$1 billion.