A joint venture between US private equity giant Blackstone and Hong Kong-based self-storage operator StoreFriendly has acquired an industrial building in Hong Kong’s New Territories for HK$560 million ($72 million), with plans to convert the Tsuen Wan property into a self-storage facility, sources familiar with the transaction told Mingtiandi.
The transaction marks the partnership’s fifth en-bloc purchase in Hong Kong since StoreFriendly and Blackstone established the joint venture in 2021, with the partners having acquired over HK$2.5 billion ($320 million) worth of Hong Kong industrial properties to date.
The acquisition comes as increased demand for storage space in densely populated Hong Kong has led global private equity investors to ramp up their self-storage platforms in the Asian financial centre.
“There are a total of some 570 self-storage premises in Hong Kong, a big increase of around 18 percent from Q3 2022. Taking advantage of a weakened retail property market, some self-storage operators have even leased ground floor shops as their premises in order to save marketing costs and to capture those customers willing to pay more for an easily accessed store,” said Alex Leung, chief surveyor at CHFT Advisory and Appraisal.
Blackstone and StoreFriendly declined to comment on the transaction.
The Hale Weal Industrial Building, which has approximately 140,000 square feet of floor area across 17 storeys, is located at 22-28 Tai Chung Road, within walking distance of the Tsuen Wan and Tsuen Wan West MTR stations in the Tsuen Wan area of western New Territories.
The HK$4,000 ($512) per square foot transaction price for the building represents a 25 percent discount to comparable industrial property transactions in the area, according to the sources who spoke with Mingtiandi.
The partners acquired the property from the family of the late entrepreneur and philanthropist Chan Wai-nam, who founded the animal husbandry and agriculture trading company Ping Shan Enterprise. The family had previously launched a tender for the building in 2015 at a reported asking price of HK$650 million, according to local media.
The joint venture’s previous en-bloc purchase was the 150,000 square foot (13,935 square metre) Novel Industrial Building in Cheung Sha Wan, which the partners purchased for HK$850 million ($108 million) from the family of the late “Wool Magnate” Chao Kuang Piu in October 2022. The building has since been renamed StoreFriendly Tower (Peninsula West).
Prior to that deal, the partners scaled up their portfolio with the acquisitions of an industrial building in Shau Kei Wan, a six-storey building in the Fanling area, and a 10-storey tower in Kwun Tong, all of which were acquired in 2021 and have since been converted into self-storage facilities operated by StoreFriendly.
CBRE represented both parties in the Hale Weal transaction.
Private Equity Moves In
Founded in 2002, StoreFriendly bills itself as one of the largest self storage operators in Asia with over 130 branches, 1.1 million square feet of space, and over 40,000 customers across Hong Kong, Macau, Singapore, and Taiwan. In 2019, the company established its property investment unit, StoreFriendly Asia Investments, to focus on value-added investments.
In addition to the joint venture with Blackstone, StoreFriendly also has a joint venture with Swiss private equity firm Partners Group in Singapore, with both fund managers providing capital support for the company to buy en-bloc properties and convert them into dedicated storage facilities dubbed StoreFriendly Towers.
Global private equity players have been competing to expand their self-storage platforms in Hong Kong, with Warburg Pincus-backed Storhub having acquired a number of properties in the city last year, including two floors in the Precious Industrial Centre in Cheung Sha Wan for a combined HK$98 million ($12.4 million).
That deal came just a month after Brookfield Asset Management bought a pair of industrial units in Hong Kong’s Chai Wan Industrial Centre as the Canadian giant expands its RedBox self-storage business in the city.
“Hong Kong’s (self-storage) market size suggests that there is still untapped demand compared to other mature markets, presenting opportunities for further growth. Additionally, there may be a potential for repricing in terms of cap rate expectations as the market develops, attracting investors with the prospect of significant yield spreads compared to traditional industrial premises,” according to a November report by consultancy Colliers.