Henderson Land Gets $930M Offer for Office Building in HK’s Central

Henderson Land Development has reportedly received a HK$7.3 billion ($930 million) offer from an undisclosed financial group for the FWD Financial Centre, a grade A office building at the western fringe of the city’s Central district, according to a source cited by local media Hong Kong Economic Times.

Henderson had originally put the FWD Financial Tower, located at 308-320 Des Voeux Road Central in Sheung Wan, one stop west of Hong Kong’s Central, was on the market in 2017 for HK$5.5 billion. As sales of big ticket commercial properties in Hong Kong more than doubled in the first half of 2018, the blue chip Hong Kong developer had increased its price for the property to HK$7.3 billion.

Should the reported deal for the building near the city’s Western Market be finalised, it would bring total asset disposals so far this year by Lee Shau-kee’s Henderson Land to over HK$21 billion.

Selling in Sheung Wan

The FWD Financial Centre has 182,400 square feet (16,950 square metres) of office space, with the upper floors enjoying the unblocked harbour views prized by mainland investors. With a total construction area of 214,400 square feet, including 32,000 square feet of retail space on the ground floor, the potential HK$7.3 billion deal works out to a unit price of HK$34,000 per square foot.

Since it was completed in 1994, Henderson, which jointly developed the International Finance Center with rival Sun Hung Kai, has been leasing the whole building out for rental income. According to real estate website Spacious.com, the rent for an 8,016 square feet office at the FWD Financial Centre with a harbour view is HK$440,000 per month, working out to a unit price of HK$55 per square foot per month.

The building’s best-known tenant is FWD Insurance, a locally based financial services company controlled by tycoon Richard Li, the younger son of Li Ka-shing.

Compared with rents in Central which averaged approximately HK$137 per square foot in the second quarter this year, according to Cushman & Wakefield research, offices at FWD Financial Centre are available for 40 percent of the rent in Central for occupiers willing to ask their staff to journey one more MTR station on the way to work.

Henderson Adds to HK$14B in 2018 Disposals

Henderson’s Sheung Wan sale, should it be consummated, would be the company’s third disposal of a Hong Kong commercial asset for more than HK$1 billion in 2018.

In January, Henderson Land sold a newly completed office tower in Hong Kong’s North Point for HK$9.95 billion to a mainland group backed by financial giant China Taiping Insurance Group. With a total investment of HK$4.6 billion to develop the 22-storey building at 18 King Wah Road, into an office tower, the Hong Kong real estate developer is estimated to have earned HK$5.45 billion profit from the transaction.

Shortly after the North Point disposal, Henderson and Lai Sun in July announced their sale of a vertical retail building in Hong Kong’s Tsim Sha Tsui for HK$4.1 billion.

At the end of 2016, Henderson sold the Golden Centre, five minutes walk from the FWD Financial Tower, for HK$4.348 billion. The 27-storey building at 188 Des Voeux Road Central, brought the developer just under HK$2 billion in profit for the year ending December 31, according to the company’s 2016 annual report.

The surge in building sales by Henderson is part of a trend in Hong Kong with figures published in July by property consultancy Cushman & Wakefield showing transactions of HK$100 million or more for commercial properties in the city were up by 136 percent during the first six months of 2018, compared to the same period last year. While the buyer for Henderson’s FWD Financial Centre remains unnamed, C&W attributed much of the upswing in sales early this year to purchases by mainland investors.

Fresh Cash for a HK$23.3B Project

Henderson may not have to look far for a place to put its recent disposal proceeds as the company moves forward with plans for one of Hong Kong’s most expensive development projects ever.

in May of last year, Henderson pushed aside a crowd of bidders to purchase the site of a parking garage on Central’s Murray Road for a record high price of HK$23.3 billion.

In May of this year, the real estate giant received approval from the government to develop the commercial site in Central into a 35-storey landmark building with a construction area of 465,000 square feet.