The Smile Centre looks ready to have some value added
SilkRoad Property Partners has acquired a cold-storage building in Fanling, an industrial area which is becoming a hotspot for alternative investments in Hong Kong’s New Territories.
Having just closed on $549 million in fresh capital last month, SilkRoad paid HK$321 million ($41.4 million) for the six-storey Smile Centre, according to an announcement by property consultancy CBRE, which advised on the sale.
SilkRoad, which also holds the Ever Gain Centre in Hong Kong’s Shatin area, expressed faith in the local market. “The project is the fourth industrial addition to our Hong Kong portfolio, reflecting our strong confidence in the city’s resilient industrial sector,” said chief executive Peter Wittendorp.
The seller is Bright Sky Investments, a company controlled by the four sons of Joseph Law, the late founder of Hong Kong toy manufacturer Smile Industries.
Fully Tenanted in Fanling
Smile Centre, located at 10-12 On Chuen Street in the eastern New Territories, is entirely leased by Horstrong Group, a local operator in cold storage and short-distance freight. Spanning 97,750 square feet (9,081 square metres) of gross floor area the investment manager’s consideration translates to HK$3,284 per square foot.
Peter Wittendorp’s Silkroad Property Partners closed on $549 mil in funding last month
SilkRoad purchased the 1990-vintage asset on an as-is basis with the existing tenant’s lease set to expire in about three years, said Samuel Lai, senior director of advisory and transaction services for industrial and logistics at CBRE Hong Kong.
CBRE describes Fanling as one of the most sought-after locations in Hong Kong for industrial investment opportunities, owing to a favourable infrastructure network and convenient access to various mainland borders, including a direct connection to Yantian port in Shenzhen.
Smile Centre is used for logistics and cold-storage by Horstrong, but the property could be reworked for another purpose like a data centre, Lai said.
“Hong Kong’s industrial market is the most resilient sector,” he said. “A lot of strong-profile tenants entering the sector means that landlords will have different angles in value adding into the asset.”
New Neighbours
If SilkRoad ultimately goes the data centre route, it will have company in Fanling — just a five-minute walk away, in fact.
Singapore-based Mapletree Investments announced last week that the 43,056 square foot site it recently bought at the junction of On Chuen Street, On Lok Mun Street and On Kui Street would be used for the firm’s first data centre in Hong Kong.
At a January tender, Temasek-owned Mapletree agreed to pay HK$813 million for the property, topping seven other bids that ranged from HK$261 million to HK$704.5 million.
The site in Fanling Sheung Shui Town is about 6 kilometres (3.7 miles) from Luohu district in Shenzhen, just north of New Territories, providing good connectivity for Chinese cloud players based in the neighbouring city.
Fanling was also the site of a industrial purchase by a unit of mainland conglomerate China Resources last year, which paid HK$820 million to buy the Kader Industrial Centre at 17-19 Lok Yip Road from local investor Tang Shing-bor.
SilkRoad Deploys Fresh Cash
This latest Fanling purchase comes around six weeks after the final closing of Silk Road Asia Value Partners II (SAVP II) which made available to Wittendorp and his partners $549 million which the fund manager says it will use to acquire pandemic-resistant assets such as industrial properties and neighbourhood retail.
The new vehicle follows a value-add strategy, targeting assets in Singapore, Hong Kong, and Tokyo, as well as in the mainland hubs of Beijing, Shanghai and the Greater Bay Area, according to a statement by SilkRoad at the time.
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