China Real Estate grows portfolio value 7.35% to £837 mln at end of ‘challenging’ 2009

China Real Estate Opportunities (AIM: CREO) said the aggregate gross
value of its portfolio amounted to £837 million as at December 31 2009,
which marks an increase of 4% in local currency terms and 7.35% in
sterling terms from £780 million at the end of June.

The company
said the year was challenging with vacancy rates in Shanghai peaking at
14.2% in Q1 and reducing to 11.4% by year end. The property portfolio
witnessed 212 lease expiries during the year, representing more than
50% of its entire tenancy base.

Approximately 55% of these
leases were renewed, whilst a further 15% were moved out of the Central
Plaza property as part of the refurbishment and re-positioning program.
Sixty new tenants, amounting to 28% of lease expiries, entered into
leases including MetLife Insurance (NYSE: MET), Prudential Insurance
(LSE: PRU) and Johnson & Johnson (NYSE: JNJ).

This resulted
in portfolio occupancy of 85% at the end of the year, representing a
year on year reduction of 6%, but translated into increases in gross
rental income on a per square metre basis.

The company has made
two disposals during the year, including the 5% interest in City Centre
5, disposed of for an 8.9% premium over valuation and the 50% interest
in Tangdao Bay, disposed of in for a 10.9% premium over valuation. The
company has also sold its 60% shareholding in RREEF China Commercial
Trust to generate a 20% return on acquisition price.

Following the disposals, the company’s cash holdings at the end of the year amounted to £75 million.

China
Real Estate expects to cover its refinancing requirements in 2010 after
completing a loan facility with CITIC Ka Wah Bank last December on
improved terms.