UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported): June 3, 2011 (May 28, 2011)
 
CHINA HGS REAL ESTATE INC.
(Exact name of registrant as specified in its charter)

Florida
001-34864
33-0961490
(State or other jurisdiction of
(Commission File Number)
(IRS Employer Identification No.)
incorporation or organization)
   

6 Xinghan Road, 19th Floor, Hanzhong City
Shaanxi Province, PRC 723000
(Address of principal executive offices)

(86) 091 - 62622612
 (Registrant’s telephone number, including area code)
 
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
 
o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
 
Item 1.01   Entry into a Material Definitive Agreement.
 
The Company entered a residential-apartment bulk-purchase agreement (the “Agreement”) with Hanzhong Municipal Public Security Bureau (the “Purchaser”) on May 28, 2011. Pursuant to this Agreement, the Purchaser will purchase a total of 224 residential-apartment units in Tower C1 and Tower C3 of the Company’s “Mingzhu Beiyuan” project located in downtown Hanzhong for a total price of RMB 120 million (approximately $18.5 million) (the “Bulk-purchase”). According to this Agreement, the Purchaser has agreed to pay RMB100, 000 for each apartment unit within 10 days after the date of the Agreement, and pay 50% of the total price (RMB 60 million, or approximately $9.2 million) to the Company within two months after signing the Agreement. The Company shall deliver all residential apartments under the contract within two and a half years after breaking ground.

The foregoing summary of the Bulk-purchase does not purport to be complete and is qualified in its entirety by reference to the Bulk-purchase Agreement, copy of which is attached hereto as Exhibits 10.1.
 
Item 8.01   Other Events
 
On June 3, 2011, the Company issued a press release announcing the Bulk-purchase.
 
A copy of the Press Release is furnished as Exhibit 99.1 hereto and is incorporated by reference herein.  The description of the Press Release contained herein is qualified in its entirety by the full text of such exhibit.
 
Item 9.01   Financial Statements and Exhibits
 
(d)   Exhibits

Exhibit No.
 
Description
10.1
 
Bulk-purchase Agreement by and between the Company and Hanzhong Municipal Public Security Bureau, dated May 28, 2011.
     
99.1
 
Press release of the Company issued on June 3, 2011.
 
 

 
 
 
 
 

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
         
       
CHINA HGS REAL ESTATE, INC.
    (Registrant)
     
Date: June 3, 2011
 
By:
 
/s/ Xiaojun Zhu
       
Xiajoun Zhu
       
Chief Executive Officer, Chief Financial Officer and Chairman of the Board

  EXHIBIT 10.1
 
Residential Apartment Bulk Purchasing Agreement
Buyer: Hanzhong Municipal Public Security Bureau   (“Party A”)
Seller: Shaanxi Guangsha Investment and Development Group Co., Ltd.  (“Party B”)


Under the principle of high quality and favorable pricing from Party B, with individual consents and Party A’s lead, according to the related regulations under “CONTRACT LAW OF THE PEOPLE'S REPUBLIC OF CHINA” and the “LAW OF THE PEOPLES REPUBLIC OF CHINA ON ADMINISTRATION OF THE URBAN REAL ESTATE”, at equality, voluntary, and on the basis of consensus, Party A and Party B reached the following preliminary agreement with regard to the bulk purchase of the residential apartments:

Article 1 The Basis of the project under construction
The bulk-purchase target is located in Guangsha Mingzhu Beiyuan, which is classified for the usage as residential property, with 70 yeas’ of use right. (Land certificate: Han Shi Guo Yong (tu) Zi No. 4659).

Article 2 Brief description of the Party A bulk purchased residential apartment
1. According to the latest project plan, the location is the entire Tower C1 and Tower C3
2. Party A bulk purchased 224 units of residential apartments
3. All of Party A bulk purchased apartments are structured with two elevators and four units of apartments on each floor. Each Tower has 28 floors. The apartments comprise two models: GFA of 125 square meters and GFA of 135 square meters (to be confirmed by Party A and Party B). The floor height is 3 meters per floor.

Article 3 Confirmation of bulk purchasing price and area
1.  
The unit price of the apartments starts from 3,000/RMB per square meter (3,000RMB/Sq. Meter is the price for apartments on the first floor. The price increases by 25RMB/Sq. Meter per floor), the price agreed herein excludes the expenses related to designs out of the scope of the design standard)
2.  
Party B shall ensure the unit price of Party A’s bulk purchase is no more than the unit price of the bulk purchase from other parties
3.  
The total area of the bulk purchase is based on the calculation from the project construction plan. The actual area will be re-measured after the completion of the project construction in accordance with the state measurement standard. The final area shall be in line with the measurement results of the local House Administration Bureau
4.  
The total contract amount of the bulk purchase is approximately RMB 120 million  (including parking and heating installation fees)
 
 
1
 
 
Article 4 Payment terms
1.  
Each apartment owner shall make RMB 100,000 initial payment within 10 days after the date of this agreement. Following the initial payment, each apartment owner shall make additional payment to make the aggregate payment equal to 50% of the total apartment price (The total price of each apartment is temporarily set at RMB 400,000) within two months after the date of this agreement. After the completion of the third floor of the apartment tower, each apartment owner shall make additional payment to make the aggregate payment equal to 70% of the total unit price. After the completion of the main body of the apartment tower, each apartment owner shall make additional payment to make the aggregate payment equal to 90% of the total unit price. The rest 10% payment will be cleared on the date of key-delivery. Party A shall be fully responsible for the project delay, rise of raw material prices, etc caused by the delayed payment as stipulated above
2.  
Party B shall only use the payment from Party A for the construction of the bulk purchased apartments. Party B is not allowed to use the payment from Party A for other business activities.

Article 5 Project delivery timeline
 
Party B shall complete the project designs, approvals, and engineering preparation works within three months after the date of this agreement. Party A shall, in its best efforts, to cooperate with Party B during the project preparation process and to reduce the related expenses to the largest extent. Party B shall complete and deliver the residential apartments herein to Party A within two and a half years of the date of this agreement; Party B shall also be responsible to help Party A obtain the property ownership certificate within half year following the project delivery. Party A shall actively cooperate with Party B in this regard.
 
Article 6 Liability for breach of contract

1.  
If Party B fail to complete the transaction (except the force majeure such as natural disaster, government policy, etc) or Party A fail to make the payment within the time frame stipulated in this agreement, the responsible party will assume the penalty at 0.1‰ of the total contract value per day.
2.  
Under the circumstance that Party A delay in making the purchase payments to Party B, Party A will assume the penalty at 0.1‰ of the total contract value per day.

Article 7 Additional agreement
1.  
Party A is prohibited from returning or exchanging the apartment (Apartments other than located in Tower C1 and Tower C3) after the execution of this agreement. If Party A return or exchange apartment without the written consent of Party B, Party A shall assume the penalty at 10% of the total contract value of this agreement.

3.  
If Party B cannot deliver all of the units of this bulk purchase at its own responsibility, or if Party B sells the contracted apartment units to other purchasers without the written consent of Party A, Party B will assume the penalty at 10% of the total contract value of this agreement.

 
2
 
 
Article 8 Miscellaneous
1.  
The apartments covered in this bulk purchase agreement shall be equipped with central heating equipment. Party A and Party B will negotiate and sign separate agreement in this regard.
2.  
Party B shall provide an underground parking slot to each apartment covered in this bulk purchase agreement. Party A shall ensure that over 90% of the apartment owners will purchase parking slot. Party A and Party B will negotiate the price and sign separate agreement in this regard.
3.  
The purchase price in this agreement does not include the property management fee. The residents from Party A will bear the property management fee on their own.
4.  
If Party A intend to add additional facilities out of the equipment listed in the attachment of this agreement, both Parties will negotiate the related expenses in accordance with the market condition.
5.  
After moving in, Party A must comply with the administrative guidelines set by Party B’s property management company and implement the relative fees to be negotiated by both Parties.

Article 9 This agreement shall become effective immediately after being signed and stamped by both Parties.

Article 10 This agreement has four duplicates with equal legal effect, each party holds two copies.

Buyer (Party A)( Stamp) Hanzhong Municipal Public Security Bureau
Legal Representative (signature)


Seller (Party B)( Stamp) Shaanxi Guangsha Investment and Development Group Co., Ltd.
Legal Representative (signature)

Date:   May 28, 2011
Signing Address: Hantai District, Hanzhong city, Shaanxi province


 
 
 
 
 
3
EXHIBIT 99.1
 
Company Contact  
Mr. Ran Xiong, Deputy GM 
E-mail: xr968@163.net   
Tel:  +86 (91) 6262 2612 
 
Investor Relations Contact:
Mr. Crocker Coulson, President
E-mail: crocker.coulson@ccgir.com
Tel: +1 (646) 213-1915 (New York)

Mr. John Harmon, CFA, Sr. Account Manager
E-mail: john.harmon@ccgir.com
Tel: +86-10-6561-6886 (Beijing)
 
For Immediate Release:
 
China HGS Signs RMB 120 Million Residential-Apartment Bulk-Purchase Agreement
 
Hanzhong, Shaanxi province, CHINA – June 3, 2011 – China HGS Real Estate Inc. (NASDAQ: HGSH) (“China HGS” or “the Company”), a leading residential and commercial property developer in China’s southern Shaanxi province, today announced that the Company signed a residential-apartment bulk-purchase agreement (the “Agreement”) for a total price of RMB 120 million (approximately $18.5 million) with the Hanzhong Public Security Bureau on May 28, 2011.
 
The Agreement covers Tower C1 and Tower C3 of the Company’s “Mingzhu Beiyuan” project, which is comprised of a total of 224 residential-apartment units and is located in downtown Hanzhong.  The total price of the Agreement is RMB 120 million (approximately $18.5 million), with an average sales price of RMB 309 per square foot (approximately $47.50 per sq. ft.).  According to the Agreement, the Hanzhong Public Security Bureau has agreed to make an initial payment of RMB 100,000 for each apartment unit within 10 days of the date of the Agreement and make an additional payment to China HGS within two months of the date of the Agreement, raising its total payment to 50% of the total price (RMB 60 million, or approximately $9.2 million).  Moreover, China HGS will deliver all residential apartments to the Hanzhong Public Security Bureau within two and a half years after breaking ground.  In addition, China HGS also is required to complete the project design, obtain the necessary approvals, and perform the related preparation work within three months of the date of the Agreement.
 
“The signing of this important bulk-purchase agreement reflects the continuous growing demand in the Hanzhong real-estate market.  Through this agreement, China HGS has successfully secured a significant portion of the revenues for the Mingzhu Beiyuan project.  We will strictly comply with the agreed terms and make sure to deliver the high-quality project to our bulk purchase customer on a timely basis,” commented Mr. Xiaojun Zhu, Chief Executive Officer of China HGS Real Estate, Inc.
 
About China HGS Real Estate Inc.
 
China HGS Real Estate Inc., through its wholly owned subsidiary, Shaanxi Guangsha Investment and Development Group Co., Ltd., specializes in real estate development in China’s second-tier and third-tier cities. The Company’s real estate properties include multi-layer, sub-high-rise, and high-rise apartment buildings. The Company possesses the national grade II real estate qualification and was ranked as the No. 1 property developer in Hanzhong, Shaanxi Province in terms of market share in 2007, 2008, and 2009 successively.
 
Forward-looking Statements:
 
This press release contains certain statements that may include 'forward-looking statements'. All statements other than statements of historical fact included herein are 'forward-looking statements'. These forward looking statements are often identified by the use of forward-looking terminology such as 'believes,' 'expects' or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website http://www.sec.gov. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
 
 

 
 
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