US private equity giant Blackstone on Thursday closed on the purchase of its third Hong Kong industrial building this year, picking up a property in Shau Kei Wan held by the family of late “Shop King” Tang Shing-bor to add to its self-storage holdings in the city, according to sources familiar with the transaction.
Blackstone purchased the 69,680 square foot (6,473 square metre) Elegance Printing Centre at 8A Kung Ngam Village Road for HK$500 million ($64 million) from the family of the late investor, as the shop king’s heirs scramble to raise cash to pay off creditors following the patriarch’s death in May of this year.
The eastern Hong Kong island asset is the latest Hong Kong industrial acquisition for Blackstone this year, following the fund manager’s HK$282.6 million purchase of a potential data centre property in the Fanling area in September and the HK$508 million buy of a 10-storey tower in Kwun Tong in April, which the firm has already opened as a Storefriendly location through a joint venture with the local self-storage operator.
This latest transaction, which was first reported by the Hong Kong Economic Times, closed on Thursday with Cushman & Wakefield representing both parties. The property consultancy had also advised Blackstone on its acquisition of the New Media Tower in Kwun Tong in April. Company representatives from Blackstone declined to comment on the deal.
Asia Self-Storage Joint Venture
At the reported compensation, Blackstone acquired the seven-storey property for the equivalent of HK$8,324 per square foot, and achieved a 14 percent discount to the HK$580 million which the Tang family paid to acquire the industrial asset in 2018.
The latest addition to Blackstone’s Storefriendly portfolio is just over 200 metres (218 yards) inland from the Island Eastern Corridor expressway, and within a six minute walk of the Shau Kei Wan station on the MTR’s Island line.
The Shau Kei Wan acquisition looks set to be a model for future deals after Blackstone’s partners at Storefriendly pointed to a deep relationship between the fund manager and the storage operator at the opening last month of the New Media Tower as the newest Storefriendly location.
“Storefriendly’s long-term collaboration with Blackstone, one of the world’s largest alternative asset management firms, allows the platform to capitalize on each other’s strengths in property investment and asset management, thereby expanding Storefriendly’s global footprint and asset portfolio to a meaningful size and scale,” said Storefriendly Self Storage Group managing partner Arthur Law in a release.
The firm referred to the Kwun Tong property as being jointly owned with Blackstone, and as the first property in its collection of more than 130 locations across Hong Kong, Singapore, Macau and Taiwan where Storefriendly has an ownership stake.
Hong Kong’s mini-storage industry is expected to grow at a compound annual growth rate of 10% over the next five years as soaring office rentals and the world’s highest housing prices help build demand for flexible storage solutions, market insights provider Mordor Intelligence said in a report this year.
Just last month Blackstone announced that it had already raised $4 billion for its Real Estate Partners Asia III fund on its way to a $9 billion target. With that total set to add to Blackstone’s $230 billion in property assets under management globally, the firm has shown an interest in self-storage opportunities in multiple markets.
Less than one month ago the New York-based firm acquired Fort Knox Storage in Australia, along with the company’s 11 Melbourne-area assets, after purchasing the KeepSafe self-storage in Perth earlier this year.
In December of last year Blackstone Real Estate Income Trust, a private REIT managed by the firm closed on its $1.2 billion purchase of Simply Self Storage and its 8 million square feet of US self storage facilities from Brookfield Asset Management.
Blackstone purchased the Elegance Printing Centre from Stan Group, a property investment firm controlled by Stan Bor, the shop king’s youngest son, who had planned to redevelop the industrial structure into a 26-storey hotel, based on the company’s 2019 application to the Hong Kong Town Planning Board to ease the plot ratio and building height restrictions.
Stan Group applied for the changes to its Shau Kei Wan title several months after Tang Shing-bor had purchased a hotel in Kowloon’s Yau Ma Tei area for HK$1.1 billion as Stan Group sought to establish its Minimal Hotel Group as a local hospitality chain.
In 2020 a mainland company controlled by Tang Shing-bor was sued for HK$12 million in back rent for a property on Tsim Sha Tsui’s Nathan Road which it had leased as a Minimal Hotel location.
The Tang family has liquidated a number of properties in recent months after the passing of Tang Shing-bor in May triggered a series of lenders to start collecting unpaid debts.
Industrial assets have been among the first liquidations from the family portfolio, including the August sale of the Mineron Centre in Fanling to China Resources Logistics for HK$695 million. In July, another unit of China Resources had purchased the East Asia Industrial Building (Phase One) in Tuen Mun from the family for HK$2.24 billion.
The Tang family’s industrial sales have come as investor appetite for Hong Kong’s warehouses, go-downs and workshops has been on the upswing. Trades of industrial properties rose 20 percent in the city during the third quarter compared to the preceding three months, according to a recent report by Colliers International.