Chinese commercial property developer and operator COFCO Land Holdings has bought a commercial property portfolio comprising Joy City malls from the offshore wholly-owned subsidiary of COFCO Group.

The Group, COFCO Land, Sheen Jade and Magic Grain as the offshore wholly-owned subsidiaries of COFCO Group, have entered into a purchase agreement in which the Group acquires and COFCO Land and Sheen Jade agree to sell the target company and shareholder loans.

The acquisition is valued at HK$12.45 billion (US$1.6 billion) which will be paid to the seller in cash by the Group upon completion. COFCO Land plans to issue shares and raise debt in overseas capital market with regard to this acquisition. Since the transaction constitutes a very substantial acquisition, the Group plans to convene a special general meeting of shareholders at the end of October or the beginning of November, a company statement said.

The target company is mainly engaged in developing, operating, selling, leasing and managing of the six mixed-use complexes under the Joy City brand that are located in Beijing, Shanghai, Tianjin, Yantai and Shenyang respectively. It also owns a commercial property project in Beijing and has non-controlling interests in two property projects each in Beijing and Shanghai.

The Group says this transaction shall be deemed to be a continuance of the asset injection of 2013 with the aim of completing the integration of commercial property assets of COFCO Group. Through this transaction, COFCO Land will take over high quality mixed-use complexes and property projects such as Joy City malls. The injection of these high quality assets that are in prime locations within first- and second-tier cities into the Group will enable it to improve its further earnings as well as its capability of sustainable development.

Zhou Zheng, chairman of COFCO Land Holdings said, "The nine property projects being acquired are strategically spread across the business hub in developed cities, among which the Joy City is the flagship brand of COFCO Group and all mixed-use complexes under are deemed high quality assets in prime locations. Upon completion of the assets injection, COFCO Land will hold a portfolio of property under the brand of Joy City and high quality retail rental property, with a stable cash flow generated from its annual income of property management.

As a flagship brand of commercial property of COFCO Group, Joy City is positioned as a modern and stylish mall targeting at middle class consumers between 18 to 35 years old. There are already seven mixed- use complexes under Joy City brand in Beijing, Shanghai, Tianjin, Shenyang, Chengdu and Yantai.

Joy City is mall-oriented, and organically consists of one or several business types of offices, hotels and serviced apartments.