Morgan Stanley bought a 30 percent stake in Agile Group Holdings’ Hainan Clearwater Bay project back in 2008 and now the Guangdong-based developer wants it back.
The US-based investment giant had earlier this month notified Agile of its intent to sell its interest in the 9.1 million square metre luxury resort project for $900 million, and Agile is planning to exercise its option to buy back the stake, according to a statement by the developer to the Hong Kong stock exchange.
Agile already owns 70 percent of the luxury residential project, with the company also developing three golf courses, six hotels and two yacht clubs on the same strip of beach. Sales of condos and villas at the Clearwater Bay development accounted for around 17 percent of the developer’s sales for 2016, according to its most recent annual report.
Morgan Stanley Selling Off Second Project in One Month
Morgan Stanley bought into the resort project for RMB 5.28 billion (then $770 million) just one year after Agile set up Crown Golden Ltd, the holding company for the development. The potential Hainan sale by the US investment manager comes during the same month that Morgan Stanley exited a retail investment in Guangzhou.
The Guangdong disposal was revealed in an April 9th statement by Link Asset Management, the manager of Hong Kong’s Link REIT, which purchased the 88,726 square metre Metropolitan Plaza in Liwan District from funds controlled by Gaw Capital and Morgan Stanley for RMB 4.1 billion ($589 million). Morgan Stanley held a 41.2 percent stake in that project with Gaw Capital controlling the remaining 58.8 percent. Morgan Stanley’s stake in the Guangdong project was owned through its $4.7 billion North Haven Real Estate Fund VII Global fund, which is understood to be nearing the end of its term.
Agile a Leading Player in China’s Answer to Hawaii
Agile’s interest in buying back its stake in the Clearwater Bay project fits with the developer’s overall enthusiasm for Hainan, the biggest tropical island under PRC control and the top beach destination for mainlanders not interested in boarding an international flight.
The Clearwater Bay project accounted for nearly RMB 9 billion of Agile’s RMB 52.8 billion in sales last year, according to the company’s most recent financial results, and the developer is targetting another RMB 60 billion in sales for the project this year.
Agile has two more Hainan projects in the pipeline with another 33,225 square metres under development at Pure Moon Bay near Haikou, and a second 30,158 square metre project at Clearwater Bay, according to its 2016 annual report.
Many of China’s largest developers have projects in Hainan, with the 33,000 square kilometre island a major attraction for homebuyers looking for a retirement destination or winter home away from the country’s smoggy cities. In addition to Agile, COFCO, China Resources Holdings, Greenland Group, Evergrande Real Estate, China Poly Real Estate, China Vanke and Country Garden all have projects in Hainan.