Hong Kong’s richest man just sold the city’s most expensive building for HK$40.2 billion ($5.15 billion), according to an announcement today by Li Ka-shing’s CK Asset Holdings to the Hong Kong stock exchange.
CK Asset, which was formerly known as Cheung Kong Property Holdings, is selling The Center, a 73-storey office tower on Queen’s Road in Central, to CHMT Peaceful Development Asia Property, a BVI-registered entity said to be backed by a consortium of mainland and Hong Kong investors. The transaction is Asia’s biggest sale of a single property this year.
The announcement confirms earlier reports of an impending deal, and demonstrates the ongoing love affair between mainland investors and Hong Kong office assets. For Li Ka-shing the sale marks the third time in the last four years that companies controlled by the investor known to locals as “Superman” have sold billion dollar properties to mainland groups.
CK Asset Sells Hong Kong’s Fifth Tallest Tower
Under the terms of a sale and purchase agreement detailed in the stock exchange announcement, CK Asset is selling its portion of The Center for the equivalent of HK$33,000 per square foot ($45,488 per square metre), after first being reported to have put Hong Kong’s fifth tallest building on the market in August last year at an asking price of HK$35 billion ($4.5 billion). The price implies a gross rental yield of just 2.2 percent, according to the Wall Street Journal.
CHMT Peaceful Development Asia Property is controlled by Beijing-based China Energy Reserve & Chemicals Group (CERCG), a privately-held, Beijing-based oil and gas firm, which holds a 55 percent stake in the investment vehicle, according to a report in the South China Morning Post. The other 45 percent stake is said to be held by a group of Hong Kong businesspersons, including David Chan Ping-chi of the Acme Group, and Wing Li Group chairman Lo Man Tuen.
In September, Tai United Holdings agreed to sell the 79th floor of the Center to Profit Gate International Limited, a subsidiary of an unidentified company, for HK$738 million – the equivalent of HK$55,854 per square foot.
Asia’s Biggest Sale of a Single Building
The sale of the Center easily tops the existing mark for Hong Kong’s biggest property deal, a standard that only stood for less than six months after Henderson Land Development agreed to pay HK$23.3 billion ($3 billion) for the site of a car park on Central district’s Murray Road in May of this year.
The transaction also far outstrips CapitaLand Commercial Trust’s S$2.1 billion ($1.5 billion) September acquisition of Singapore’s Asia Square Tower 2 from a BlackRock-managed fund to grab the title of Asia’s biggest office transaction of the year so far.
Mainland Romance With Hong Kong Property Continues
The sale of the Center comes less than one month after Shenzhen-based LVGEM (China) Real Estate Investment agreed to buy a waterfront building in the Kwun Tong area of Kowloon East from Wheelock & Company for HK$9 billion ($1.2 billion), in just the latest in a string of deals that have seen mainland investors snap up at least HK$81.5 billion ($10.44 billion) worth of buildings in Hong Kong since 2016.
In early 2016 mainland financial giant China Everbright agreed to purchase the Dah Sing Financial Centre in Hong Kong’s Wanchai district for HK$10 billion (then $1.29 billion), just blocks away from where Evergrande Real Estate had purchased the Mass Mutual Tower in Wanchai from Chinese Estates a few months earlier for HK$12.5 billion.
Li Ka-shing Keeps Cashing In
For Li Ka-shing this latest deal helps Hong Kong’s $34 billion man add to the stack of cash he’s made selling buildings to mainland buyers. While the Center is Li’s biggest sale to date, the deal announcement comes just 369 days after Cheung Kong Property Holdings sold the Century Link commercial complex in Shanghai’s Pudong district to a fund invested by China Life for RMB 20 billion (then $2.96 billion).
That sale to ARA Harmony VI, a fund invested by the mainland insurer and managed by Singapore-based ARA Asset Management, in a deal also invested by two other ARA-managed funds, was Asia Pacific’s biggest sale of a single property last year.
That transaction in Pudong’s Zhuyuan area was preceded in 2013 by Li’s Hutchison Whampoa and Cheung Kong Holdings selling the Oriental Financial Center (東方匯經中心) in Pudong’s Lujiazui area to China’s Bank of Communications for $1.15 billion. Hutchison Whampoa and Cheung Kong Holdings were later restructured to form Cheung Kong Property Holdings.