Shui On Land parted with another jewel in its crown of downtown Shanghai assets yesterday when the Hong Kong-listed developer agreed to sell the Corporate Avenue 3 building to a unit of oyster sauce heavyweight Lee Kum Kee and developer China Vanke.
Two Shui On subsidiaries agreed to sell the 87, 295 square metre tower near Shanghai’s Xintiandi entertainment district to a joint venture company held by Lee Kum Kee and Vanke for RMB 5.7 billion ($885 million) according to an announcement filed late yesterday with the Hong Kong stock exchange.
The sale of the newly finished complex comes less than five months after Shui On sold two office towers in the first phase of the Corporate Avenue project to Hong Kong’s Link REIT for RMB 6.6 billion, as the developer struggles to offload debt.
Vanke to Manage Downtown Shanghai Office Tower
Under the terms of the acquisition, KK Health Products Group Limited, a unit of the famous oyster sauce maker, will own 90 percent of the project, with Vanke Property (Hong Kong) Company Ltd owning the other 10 percent. Also as part of the agreement, Vanke Property will be retained as asset manager of the property.
The centrally located tower includes 24 floors of grade A office space, and five floors of retail along the shore of Hubin Lake in Shanghai’s Huangpu district. Completed in the first half of 2015, Corporate Avenue 3 is said to be ready to open at the end of this month, according to a statement by the company.
For Vanke, the successful transaction comes after the developer was tied to a reported unsuccessful attempt to purchase the uncompleted phase three of Corporate Avenue from Shui On in a joint bid with private equity firm PAG Real Estate Partners and US developer Tishman Speyer in July of this year.
Shui On Selling Downtown Assets
The sale of Corporate Avenue 3 means that Shui On has now sold off all of the completed parts of its Corporate Avenue complex, with only the uncompleted phase three left in its portfolio.
The first phase of Corporate Avenue enjoys some of the highest office rents in Shanghai’s Puxi area west of the river, with rates averaging around RMB 12 per square metre per day earlier this year, and little to no vacancy.
Prior to the sale of phase one, Shui On had already sold Corporate Avenue 3’s twin, Corporate Avenue 5, to insurer China Life in 2013 for RMB 3.32 billion.
These sales are part of a string of asset disposals and share sales for Shui On, which once figured among the most prominent real estate developers on the mainland.
In late May Shui On Group subsidiary SOCAM sold the Four Seasons Hotel in Pudong to local Chinese developer BM Holdings for RMB2.3 billion ($371 million). During the same month, SOCAM sold off its stake in a cement joint venture for HK$2.55 billion ($329 million).