A joint venture between US real estate fund manager Angelo Gordon and a Hong Kong family office serving one of the region’s oldest shipping families has agreed to sell a retail property in the New Territories’ Tseung Kwan O area for HK$780 million ($99.42 million), according to an announcement to the Hong Kong stock exchange last week.
Hong Kong-listed Wang On Group and its property unit Wang On Properties jointly announced their acquisition of the commercial podium at the Parkside, a residential community a few minutes walk from the Tseung Kwan O MTR station in the area of northwestern Hong Kong just before the May 1 holiday.
The HKSE-listed firm is purchasing 100 percent of the equity in a company which controls the 32,564 square foot (3,025 square metre) property from a vehicle jointly owned by Angelo, Gordon and Company and Mordril Properties, a private investment firm controlled by the Chellaram family.
The deal, which values the two-storey property at just under HK$24,000 per square foot of net lettable area, provides Mordril, which originally purchased the asset in 2016, with a boost in valuation of over 65 percent over the original purchase price, with Wang On looking at the acquisition as a way to expand its asset management business in the city.
Asset Brought Profit of HK$71M in 2018
Wang On’s Tseung Kwan O prize forms the commercial element of the three-tower Parkside residential complex which was completed by blue chip Hong Kong developer Wheelock and Co in 2016 as one of a set of four residential projects in Tseung Kwan O. In addition to the retail facilities, Wang On’s haul includes 49 car parking spaces and five motor cycle parking spaces on the basement floor.
Wang On noted in its statement that the existing tenancies in the mall are all under a fixed term with the earliest lease expiry on its way this year and the latest expiry scheduled for 2021. The company reasoned that the acquisition can help it to explore its asset management business, while enlarging its investment property portfolio and enhancing its rental income.
In 2018 the property achieved revenue of nearly HK$21.5 million according to Wang On’s statement, while it also provided net profit before taxation and extraordinary items of nearly HK$71 million.
Hong Kong-based co-working outfit Campfire Collectives previously leased the entire first floor of the mall and in August last year launched the Campfire Campus Playhouse, a “co-learning” space that “connects children with engaging education providers in an exciting and entertaining environment, where they can meet and play with others in a fun and safe place”, according to its website. The playhouse, together with its family restaurant After 3 at Campfire, recently closed their doors.
Mordril Get 65% Capital Gain, Angelo Gordon Achieves Exit
Mordril originally acquired the retail podium from Wheelock in January 2016 for HK$510 million, or around HK$15,661 per square foot, with the company saying at the time that it intended to position the shopping centre as a destination location in Tseung Kwan O. Originally formed in 1955 and previously known as Mordril Investments, the company is helmed by Vikram S. Chellram, a great-grandson of the founder of KC Maritime, a regional shipping firm formerly known as the the Kishinchand Chellaram Group.
In November 2016, Mordril sold a 60 percent stake in the project to a vehicle controlled by Angelo Gordon & Co for HK$500 million according to local media accounts at the time, which translates into the the New York-based alternative investment firm paying the equivalent of HK$25,591 per square foot for its share of the property, That valuation is nearly 7 percent less than the HK$23,953 per square foot which Wang On indicated in its latest announcement.
The Chellarams and Angelo, Gordon did business together again in 2018 when they teamed up to purchase nine floors in the C-BONS International Centre in Kowloon East’s Kwun Tong area for HK$2.5 billion according to local media accounts at the time.
Retail Space at Wheelock Projects Becomes Hot Property
Wang On’s acquisition also marks the fourth trade in just over six months of a retail podium in a Tseung Kwan O residential project developed by Wheelock
In early October last year Wheelock announced that it had sold a trio of retail properties in the area to private equity fund manager Phoenix Property Investors for HK$3.38 billion.
That set of three community retail centres are located in a row with The Parkside, with the Savannah at 3 Chi Shin Street a few hundred metres to the east, the Capri at 33 Tong Yin Street located just to the west and the Monterey at 23 Tong Chun Street situated a few hundred metres to the south.