China’s Cheung Kei Group is adding to the grand mainland investor fire sale in Hong Kong with market sources confirming that the group’s corporate headquarters in Kowloon is being repossessed by Hang Seng Bank, while two luxury residences belonging to the company chairman are also reportedly being seized.
Hang Seng Bank, a subsidiary of HSBC Group, is taking over the Cheung Kei Center building in the Hung Hom area and has appointed receivers from PriceWaterhouseCoopers to control the asset, according to market sources who spoke with Mingtiandi, confirming earlier reports by local media. Cheung Kei had acquired the 17-floor property for HK$4.5 billion (then $580 million) in 2016.
The seizure of the 300,000 square foot (27,870 square metre) office property is among a raft of moves by creditors to take over assets belonging to the private mainland investment firm controlled by Shenzhen’s Chen Hongtian. The garments-to-property tycoon first made waves in Hong Kong in 2016 when he spent a record HK$2.1 billion for a home in the city’s Peak area, after complaining that his 5,154 square foot apartment in the Mid-Levels was too small.
Chen is now losing those two homes, as well as his corporate headquarters, according to media reports, with Bloomberg reporting this week that Cheung Kei has already defaulted on a loan used to purchase an office building in London in 2017, with debt failure on a second property in the Canary Wharf financial district said to be on the way next month.
The Cheung Kei Center in Hung Hom, which consists of an office block connected with a low-rise podium and a collection of parking spaces, is estimated to be worth around HK$4 billion ($510 million), according to a property consultant cited in the Hong Kong Economic Journal. That valuation is around 11 percent less than what Cheung Kei paid to acquire the section of Wheelock and Company’s One HarbourGate complex seven years ago.
A noticed posted in the lobby of the Cheung Kei Center said that receivers had taken over the property on behalf of Hang Seng, according to the Economic Journal report, citing PWC partners Christopher So and Victor Jong as the appointed officers as the takeover of the property at 18 Hung Luen Road progresses.
Records with Hong Kong’s Companies Registry show Chen Hongtian and family members continuing to hold their positions as directors controlling Cheung Kei Center Ltd, which holds the property. Cheung Kei had not responded to inquiries from Mingtiandi by the time of publication.
No formal effort to market the property has been launched as of now, according to market sources, with the China Evergrande Center in Wan Chai still waiting for a buyer after creditors seized it in September last year. An attempt by receivers from Alvarez & Marsal to market the property starting that same month having so far failed to result in a transaction.
The Goldin Financial Global Centre in Kowloon Bay, which formerly served as headquarters for mainland conglomerate Goldin Financial, was sold by receivers for HK$5.6 billion in a deal which closed in January this year, with the transaction reflecting a 60 percent discount from the HK$14 billion which Goldin claimed to have sold the property for in 2020.
Chen, who was estimated by China’s Hurun Report to have a household net worth of $5.6 billion in 2022, also saw his personal residence at 15 Gough Hill Road on Victoria Peak in Hong Kong seized by creditors in recent weeks. Receivers appointed by Bank of East Asia took over the property this month, with Deloitte China partners Derek Lai Kar-yan and Ivan Chan Man-hoi appointed as receivers, according to a report in the South China Morning Post citing sources familiar with the process.
When Chen purchased the 9,200 square foot home for HK$2.1 billion in 2016 he had explained that his apartment at Swire Properties’ Opus complex in the Mid-Levels was too small. Now that 5,100 square foot apartment, which Chen had purchased for HK$380 million in 2015, is also being seized by creditors, according to the Economic Journal report.
While the Cheung Kei Center commercial block has seen its value slide, the Gough Hill Road mansion is estimated to have kept most of its worth, while the flat in the Opus may have appreciated by nearly 80 percent, according to a property consultant cited in the media account.
All three properties are expected to be launched for tender after takeover procedures are completed.
Chen’s loss of his Hong Kong homes rhymes with a number of other transactions in recent months involving fabulous housing for mainland real estate millionaires in the financial hub.
An HK$800 million mansion on Victoria Peak that was formerly owned by Evergrande chairman Xu Jiayin was seized by creditors in November last year, with receivers still struggling to liquidate the luxury home.
Representatives of CBRE and Centaline Property, which were engaged by China Construction Bank (CCB) Asia to market the home, had earlier predicted a sale within this month. However, an account by Bloomberg on Thursday said bids had fallen short of the seller’s expectations and that the mansion will remain on the market.
In July last year a luxury home once belonging to Kaisa Group chief executive Mai Fan was sold by receivers for HK$300 million, after the mainland executive had paid HK$350 million to acquire the home in 2017.
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