State-owned “bad bank” China Cinda Asset Management has been revealed as the buyer of a hotel in Hong Kong’s Tsim Sha Tsui area, spending HK$4.3 billion ($550 million) on the asset despite a 70 percent slump in hotel investment during the third quarter of this year.
Land Registry documents filed in mid-September show that the four-star Kimberley Hotel, which fell into receivership after the owner died under interrogation on the mainland, has been purchased by Pleasure Bright Holdings Limited, a company which lists as its directors a pair of individuals believed to be officers of the Hong Kong branch of Beijing-headquartered China Cinda.
The sale of the tourist hotel comes two and a half years after the hotel’s former owner, Fujian-born businessman Stephen Lau Hei-wing, died in an interrogation centre near the North Korean border as Chinese officials tried to extract a confession believed to be related to a business dispute.
20% Discount as Hotel Bookings Collapse
With hotel bookings in a state of free fall in the Asian financial hub, the state-owned asset manager is acquiring the property for a price which is approximately 20 percent less than the HK$6 billion that the receiver had been asking for the 546-room hotel. At HK$4.3 billion Cinda is acquiring the property for the equivalent of HK$7.87 million per key.
The Land Registry records, which have come to light this week, confirm reports from two weeks ago that an offer had been made to buy the hotel.
The government documents list Chen Zhiwei and Li Qi as directors of Pleasure Bright, the entity which purchased the hotel. An individual named Chen Zhiwei was described last year as the Assistant General Manager of China Cinda (HK) Holdings Co. Limited, where he also serves on the board of Hong Kong-listed mainland developer Modern Land. Li Qi is also said to be an officer of China Cinda in Hong Kong, according to local media reports.
The 243,301 square foot (22,603 square metre) hotel is located within one of Hong Kong’s most popular shopping areas for visitors and is around half a kilometre from the Tsim Sha Tsui metro station and a fifteen-minute walk from the waterfront Avenue of Stars.
Standard rooms at the 29-year-old property cost HK$792 per night, while a suite measuring 350 feet square is available at a daily rate of HK$1,647.
Lau, who made his fortune in the garment industry, paid HK$1.9 billion to purchase the hotel in 1995.
HK$200M Fraud Accusations
The new owners are taking possession of the 21-storey property just over a year after nine former mainland government prosecutors received prison terms of up to 15 years for their roles in Lau’s death.
Court documents revealed that Lao had been bound to a chair for four days and faced 80 hours of sleep deprivation while interrogators tried to force a criminal confession.
His interrogators stabbed him with keys and covered his face with a toilet plunger before Lau eventually suffocated to death due to fractured ribs and other internal injuries.
In 2016, the year before he died, Lau had been accused of defrauding the Industrial and Commercial Bank of China (Asia) out of HK$200 million in loans.
Hotel Sector on Life Support
China Cinda is taking on the asset as hotel bookings plummet in Hong Kong after four months of continuing social unrest and tear gas. Visitor arrivals to the city in August were 40 percent lower than the number recorded during the same month one year ago, dropping from 5.9 million to 3.6 million.
Analysts at data consultancy STR said that hotel occupancy in the Asian financial hub plunged to 64 percent in August, while revenue per available room almost halved to HK$694.
A report released by property services firm Savills just three days ago noted that hotel investment in Hong Kong dropped 70 percent during the period from July to September compared with the same period last year, with just $134 million in hospitality property transactions recorded in Hong Kong during the third quarter, according to the real estate firm.
The city government was forced to cancel the sale of a commercial site located on Hong Kong’s former airport runway just over three weeks ago that had required at least 30 percent of the eventual gross floor area to be a hotel.
The city’s Lands Department said they would re-auction the land at a later date after all of the bids submitted for the site failed to reach the auction minimum.