Funds managed by Blackstone have agreed to purchase a controlling stake in Hong Kong International Construction Investment Management Group Co. Ltd (HKICIM), the listed property subsidiary of China’s HNA Group, for HK$7.02 billion ($894.8 million), according to an announcement to the Hong Kong stock exchange on Friday.
The acquisition reunites Blackstone with the company, formerly known as Tysan Holdings, which the US firm had sold to HNA in August 2016 for HK$2.62 billion, and marks the latest in a series of asset trades between the US private equity group and the Chinese conglomerate.
The deal was announced just one week after HNA Group had transferred control of the CentreHollywood in Hong Kong’s Sheung Wan area to HKICIM, and just over one month after the Hong Kong-listed firm had sold the last of a collection of four plots in the city’s Kai Tak area at a HK$550 million loss.
In response to inquiries from Mingtiandi regarding the transaction, sources at Blackstone declined to comment beyond the information contained in the stock exchange announcement.
Blackstone Buys 70% Stake in HK-Listed Firm
Under the terms of a sale and purchase agreement between HNA Group and Blackstone, the US private equity firm has conditionally agreed to purchase more than 2.34 billion shares in HKICIM from companies controlled by HNA at a price of HK$3.00 per share.
The sale, which would give Blackstone a 69.54 percent stake in HKICIM, is conditional upon HNA meeting a number of conditions, including resolving loans made by Hong Kong-based private equity firm PAG to HNA Group in February last year which were guaranteed by just under 1.4 billion shares in the Hong Kong-listed company. A Blackstone fund invested in PAG in March of 2018, taking a minority stake in the company, which sources at PAG indicate is a passive interest.
PAG had made the loans, which were said at the time to be for up to HK$3 billion in value, just before HNA began selling off its Kai Tak plots. HNA sold the last of its four projects on the former airport site to Wheelock & Company at the end of January for HK$740 million, the second of two plots it had sold to the local blue chip developer. The company had disposed of the other two Kai Tak plots to Henderson Land in February of 2018 for HK$16 billion.
Following the transaction, Blackstone will hold a 71.5 percent stake in HKICIM and the HK$3.00 price per share represents a 14.5 percent premium over the stock’s closing price on Friday. The transaction, which calls for the Blackstone funds to pay HNA just over HK$3.9 billion at the closing of the sale and purchase agreement, is set to finally be concluded on March 8th, 2020.
Blackstone Picks Up Sheung Wan Asset
After the disposal of its four Kai Tak sites, HKICIM’s most significant asset is CentreHollywood, a 32,727 square foot (3,040 square metre) commercial property about 400 metres uphill from the Sheung Wan MTR station, just one metro stop west of the city’s Central financial district.
Offices in the 28-storey building are available for lease on local property websites for between HK$40 to HK$50 per square foot per month, with the lower two floors occupied by a mid-range restaurant.
HNA had purchased the 1994-vintage tower from a joint venture between Hong Kong Resorts International and Hanison Construction, a pair of companies controlled by the Cha family, in March 2015 for HK$550 million.
According to HKICIM”s 2017 annual report, the company also holds in its portfolio a number of completed residential projects in mainland China.
Acquisition Spree Continues
The HKICIM buyout is the latest in a set of rapid-fire acquisitions in Greater China by Blackstone, which raised $$7.1 billion in investment for its Blackstone Real Estate Partners Asia II fund in mid-2018.
In mid-February the firm directed by finance kingpin Stephen Schwarzman agreed to purchase a 50 percent stake in the shopping centre assets of the Asian division of US mall developer Taubman Centres in a deal valued at $480 million, giving it significant holdings in properties in two Chinese cities as well as another in South Korea.
That acquisition was preceded by a deal late last year where funds managed by the firm purchased a set of five buildings in the Mapletree Business City Shanghai office complex, as well as the adjoining Vivocity Shanghai mall, from Singapore-based Mapletree Investments for $1.25 billion.
In December, Blackstone had teamed with Goldman Sachs and Hong Kong-based Gaw Capital to buy a dozen shopping centres in Hong Kong from Link REIT for about $1.5 billion.