Moody's affirms Hysan Development

Moody's Investors Service said it affirmed the Baa1 issuer and senior unsecured ratings of Hysan Development Co. Ltd. in response to the company's announcement that it has disposed of its entire interest in the Entertainment Building in Central in Hong Kong for HK$2.7 billion.

The outlook remains stable.

The affirmation reflects Moody's opinion that the asset sale will help provide financial flexibility and liquidity support to the company as it implements capital expenditure for the continued upgrading and redevelopment of its investment property portfolio. Moody's said it understands that the announced transaction is expected to be completed toward the end of 2005 and part of the proceeds will also be applied toward debt reduction.

The Baa1 ratings also continue to reflect Hysan's stable operations with recurring rental income from its office, retail and residential properties. The ratings also recognize Hysan's focused business strategies and Moody's expectation that management will prudently and effectively implement its business plans.

At the same time, Moody's said the ratings reflect the geographic concentration of the company's property portfolio and the ongoing capex requirements of its renovation and redevelopment programs as well as the associated potential business and financial risks. The ratings also consider Hysan's slow pace of capital formation, resulting from its relatively high dividend pay-out policy.

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