China Architectural Engineering, Inc. ("CAE" or the "Company") (NASDAQ:CAEI) , a leader in the design, engineering, fabrication and installation of high-end building envelope systems, announced that it has signed a Letter of Intent of Land Transfer ("LOI") to purchase land from Zhejiang Nine Dragon Co., a subsidiary of Shanghai Nine Dragon Co.
The planned construction area is 1, 600, 000 square feet with a transfer price at US$34 per square foot, for a total consideration of US$55 million. The transaction is scheduled to close within six months after signing the contract. In addition, Nine Dragon, subject to each party’s willingness, may transfer an additional 2, 700, 000 square feet of its reserved land at Nine Dragon Resort to CAE at a later date.
According to the LOI, the purchased land will be constructed into a mixed- used complex, which includes a shopping mall, movie theatre, and residential complex. Both parties agreed that the minimum selling price of the residential complexes will be US$136 per square foot, and any price premium above USD$136 will be equally shared by both CAEI and Nine Dragon. Currently, the market price for similar properties in this area ranges between US$186 and US$279 per square foot.
The Nine Dragon Resort ("Resort"), which was mentioned in the Company’s press release date June 25th, 2009 is mainly developed by Shanghai Nine Dragon Co.( http://www.ninedragon.com.cn/ ). The Resort covers nearly 2, 500 acres and aims to become a preeminent tourist destination in China. To date, the Resort has already completed the construction of horse race tracks, polo grounds, yacht docks, golf courses, and other high-end leisure recreations. Future projects under construction include a marine theme park, movie theatre, premium retail outlets, five-star hotels, and luxurious residential apartments.
Ken Yi Luo, Chairman and Chief Executive Officer of China Architectural Engineering commented, "We are very excited about the opportunity to deepen our strategic partnership with Nine Dragon Resort. Based on the current market price and our estimated construction cost of US$40 per square foot, we project this development project can generate more than US$100 million in gross profits for CAE over the next three years.
"The Resort is located in the center of the Yangtze River Delta, only 62 miles from both Hangzhou and Ningbo, two of the most affluent cities in the country, and a two-hour drive from Shanghai, the financial and commercial heart of China. As the Chinese government has pledged to make Shanghai an international financial hub, more and more professional talent will be drawn to come work and live in the Yangtze River Delta. Tourism, and luxury tourism in particular, will become attractive and fast-growing markets with the increasing number of wealthy individuals around this area and we are confident the Nine Dragon Resort will be able to command a significant share of this sector.
"As previously mentioned, we believe that our cooperation with Nine Dragon to develop this valuable land creates a unique, new business opportunity for CAE, enabling us to expand our scope into real estate development by leveraging our core expertise. We believe this is a landmark event for our company to further strengthen our strong brand, deep technical expertise, and rich operating experience. We view our strategic expansion into real estate development as a natural evolution in our corporate strategy, and we are confident that this new initiative will further enhance our operating scale and efficiencies, thereby augmenting our revenue growth and return on investment, and ultimately, fulfilling our vision to become the leader in China’s fast growing real estate and construction industry."
About China Architectural Engineering
China Architectural Engineering, Inc. (NASDAQ:CAEI) is a leader in the design, engineering, fabrication and installation of high-end curtain wall systems, roofing systems, steel construction systems, and eco-energy systems. Founded in 1992, CAEI has maintained its market leadership by providing timely, high-quality, reliable, fully integrated, and cost-effective solutions. Collaborating with world-renowned architects and building engineers, the Company has successfully completed nearly one hundred large, complex and unique projects worldwide, including numerous award-winning landmarks across Asia’s major cities.