The Mandarin Oriental Hotel group has begun to receive offers for the Excelsior Hotel in Hong Kong’s Causeway Bay, with at least five bids reportedly valuing the four-star waterfront property at HK$30 billion ($3.8 billion).
If the 848-room Excelsior is sold for the reported figure, the deal would mark the city’s biggest-ever commercial property transaction.
The London Stock Exchange-listed hotel owner and operator announced on Friday that it has received proposals for the acquisition, without providing further details about the suitors or their offers. The luxury hotel brand, a member of the Jardine Matheson Group, added that no assumption should be made as to whether a sale will take place.
SHK, Hysan and Evergrande Said to Be Among Bidders
Bidders are said to include Hong Kong developers Sun Hung Kai Properties and Hysan Development, as well as a joint bid by Chinese Estates Holdings and China Evergrande Group, according to accounts in the South China Morning Post and in Bloomberg, citing local news reports.
In its announcement, Mandarin Oriental said the offers from potential purchasers “will form the basis for further consideration of the Company’s strategic options.” The company first announced that it was testing market interest in the Excelsior in early June.
The Excelsior site, which was the first plot of land sold in Hong Kong in 1841, has been approved for the development of a 684,000 square foot (63,546 square metre) commercial project, equating to a potential price of nearly HK$44,000 ($5,627) per square foot.
Mandarin Oriental decided to test market interest in the property less than a month after Henderson Land Development agreed to buy a car park in Central for HK$23.3 billion ($3 billion) at a government land auction. That sale valued the Murray Road redevelopment site at HK$50,064 per square foot, based on a maximum gross floor area of 465,000 square feet (43,199 square metre), setting records for Hong Kong’s biggest property transaction to date and the highest price per square foot.
The record for total value was shattered at the end of May, when Hong Kong’s Nan Fung Development outbid 11 rivals to win a site for a 1,912,424 square foot (177,670 square metre) commercial project near the former Kai Tak airport in Kowloon for HK$24.6 billion ($3.16 billion).
If sold, the Excelsior could surpass the previous price record by HK$5.4 billion, although its price per square foot would fall short of the Murray Road sale owning to its slightly less valuable location. The hotel, which opened in 1973, is located at 281 Gloucester Road in the city’s priciest shopping hub. Potential buyers may be interested both in redeveloping its upper floors into offices and turning its lower-level podium into retail space.
Mandarin Oriental currently operates 30 hotels, all of which are five-star luxury properties except for the Excelsior.
Hong Kong, Mainland Developers Want a Prime Piece of Causeway Bay
Leading developer Sun Hung Kai has been among the failed bidders on a number of commercial site offerings this year, including both the Murray Road and Kai Tak auctions.
The other reported suitors for the Excelsior, Hong Kong developer Chinese Estates and the mainland’s largest homebuilder Evergrande, are longstanding partners. In July, Chinese Estates revealed that it had acquired a five percent stake in Evergrande since April for a total price of HK$8.1 billion ($1.04 billion).
Evergrande purchased the Mass Mutual Tower in Wanchai from Chinese Estates for HK$12.5 billion ($1.61 billion) in November 2015, setting a new price record for a Hong Kong office building.