Hanison Construction and Angelo Gordon have sold a commercial building in Sheung Wan to a joint venture between mainland investor Hugo Lam and Hong Kong-listed Asia Cassava Resources for HK$1.1 billion ($140 million).
The acquisition by the joint venture provides Hanison — which is controlled by Hong Kong Resorts International chairman Payson Cha — and Manhattan-based private equity real estate specialist Angelo Gordon with a HK$500 million increase in the value of the building at 338 Queen’s Road Central since the HK-NYC duo purchased it in 2016.
The JV, which is 60 percent held by Asia Cassava and 40 percent owned by Lam, (who also goes by Lin Tsz-fung or Hugo Lin), is paying the equivalent of HK$18,054 per square foot for the 60,927 square foot (5,660 square metre) 999-year leasehold property, according to a stock exchange filing by Asia Cassava on Monday.
Serviced Apartment Price Doubles After Repositioning
The commercial building a five-minute walk from the Sheung Wan MTR station comprises 62 residential units of 400 to 800 square feet, which are currently operated as serviced apartments, and is already licensed for hotel use.
The new owners don’t seem to be planning radical changes to the building’s current function, with Asia Cassava noting in its statement that, “it is expected that the remaining part of the property will be used as serviced apartments and/or offices after completion.” However, part of the repositioning of the asset during the two years that Hanison and Angelo Gordon controlled the property included securing the rights to use the space in the prime commercial location for offices.
“The seller renovated all of the common areas in the building. And most importantly, they got the government approval to convert the building to office use, meaning that no premium is required for the owner if the building is to become office,” Jonathan Chau, Senior Director of Investment and Sales at Savills said during a phone interview with Mingtiandi.
After purchasing the building in June 2016 for HK$600 million from a Chinese company, Hanison Construction and Angelo Gordon hired a marketing agency to rebrand the property from 338 Apartment to Queen Central, while also conducting renovations and converting the property rights.
The property, which includes ground-floor retail space, was put up for sale last year via a tender process managed by Savills that concluded on October 10th with three bids, none of which reached the asking price of HK$1.1 billion, according to Chau. The property consultancy then moved on to privately negotiate with different buyers regarding the sale of the property.
Hanison Adds to HK$3B in Disposals in Past Six Months
Payson Cha’s Hanison can add its share of the HK$500 million in profit generated from this Sheung Wan disposal to the nearly HK$3 billion in income it generated from a pair of previous transactions over the past six months.
In December Hanison, together with private equity firm PAG, sold the 29-storey Success Centre in the New Territories to “Shop King” Tang Shing-bor for HK$1.04 billion, and then followed up on that deal in late February by unloading a 50 percent stake in the PeakCastle commercial building in Cheung Sha Wan for HK$800 million ($102 million).
Angelo Gordon has also been active in Hong Kong’s real estate capital markets this year as the real estate fund manager partnered with the Chellaram family to buy nine floors in office building C-BONS International Centre in Kwun Tong for HK$2.1 billion ($269 million) in late January.
Hugo Lam Buys Second HK$1B Property in 30 Days
The sale of Queen Central also marks investor Hugo Lam’s second high-profile purchase in the last month. In April, Lam bought a 22,000 square foot Kwun Tong industrial site for HK$1.6 billion ($204 million) which the investor says he plans to develop into a grade A office tower of as much as 263,000 square feet.
Described by local media as a veteran property investor, Lam is best known for buying nine shopping malls and some 3,000 parking spaces from Link REIT for HK$4.3 billion in a span of three years from 2014. His portfolio includes Tsing Yi’s Cheung Hong Commercial Centre, which he purchased in February 2017 for around HK$1.1 billion.