The heirs of Hong Kong’s late “Shop King” Tang Shing-bor have put a Kowloon East hotel back on the market, in their latest move to wind down the family’s property portfolio after an ill-timed venture into the city’s hospitality sector in the pre-2019 boom.
With Hong Kong hotel occupancy and room rates recovering from from their post-pandemic lows, Stan Group, a family office chaired by Tang’s 37-year old heir Stan Tang, has engaged consultancy JLL to market the 598-key Hotel Cozi Harbour View in the Kwun Tong area for an asking price of HK$2.22 billion ($284 million).
“The average occupancy rate of the hotels in Hong Kong for January to October 2023 achieved 81 percent (versus only 63 percent in 2021 and 66 percent in 2022),” said Alex Leung, chief surveyor at CHFT Advisory and Appraisal. “For the latest available figure of October 2023, the increase in ADR doubled to 49.9 percent year-on-year. There will be limited new hotels to be built in the urban area, and it forms solid support to the performance of the hotel business in the foreseeable future.”
The family is also selling a 56.7 percent stake in an adjoining industrial building for HK$180 million ($23 million). JLL, which did not name the sellers in its marketing document, is shopping the assets as a package.
The latest sale attempt comes after Hong Kong-based rental accommodation provider Weave Living passed on a chance to acquire the Hotel Cozi Harbour View after conducting due diligence on the asset in October 2022.
The hotel comprises 235,300 square feet (21,832 square metres) of gross floor area across 32 storeys and is located at the junction of Wai Yip Street and How Ming Street, less than a 10-minute walk from Ngau Tau Kok MTR station.
Acquired by the family from developer Henderson Land in 2017 for HK$2.3 billion ($295 million), the hotel is now being marketed at a 28.4 percent discount to the asset’s HK$3.1 billion ($396 million) estimated valuation when the hotel first hit the market in March 2022.
Weave last year was in talks to acquire the Hotel Cozi Harbour View and Hotel Ease — another Tang family-owned property — for an undisclosed sum but ultimately did not proceed with the transaction. Weave Living had not responded to inquiries from Mingtiandi by the time of publication.
The adjacent Jone Mult Industrial Building is a 14-storey industrial building constructed in 1965, with the family’s 56.7 percent stake representing a total saleable area of 42,000 square feet. In addition to the family’s holding, JLL noted that an additional 15 percent stake is up for sale by individual minority owners.
A purchase of both the Tangs’ and the minority holders’ stakes would enable the buyer to apply for compulsory sale that could force out the remaining minority holders. The Hong Kong government has proposed lowering the threshold for forced auctions to 70 percent from 80 percent.
With property values sliding in Hong Kong in 2022 and 2023, JLL highlighted that the HK$4,200 ($537) per square foot asking price is 16 percent lower than the HK$5,000 to HK$5,500 ($640 to $704) average transaction rates in neighbouring industrial buildings in recent years.
The Tang family has been liquidating its property portfolio at steep discounts after its hospitality business ground to a halt following a collapse in mainland Chinese visitors to Hong Kong following the city’s 2019 protests, with that challenge having been compounded by the COVID-19 pandemic.
The late Tang, who died in May 2021, earned his fortune and “Shop King” moniker from the 200-strong set of retail shops he accumulated in Hong Kong’s Causeway Bay shopping district before the 1997-98 Asian financial crisis torpedoed a planned IPO for the firm.
In later life, Tang began grooming his youngest son Stan to take over the family business. Under the junior Tang, the family expanded into the hospitality sector, acquiring both a 14-storey hotel at 80 Kimberly Road in Tsim Sha Tsui for HK$330 million and the 30-storey Inn Hotel Hong Kong in Yau Ma Tei for HK$1.1 billion in 2018, among other assets.
That bet went sour starting in 2019, and by 2020 Tang was looking to back out of the hospitality business, having scrapped a planned HK$328 million acquisition of the H1 Hotel in Mong Kok and initiating a clearance sale of a property portfolio estimated to be worth HK$6.5 billion.
In addition to its hotel disposals, in August 2022, the junior Tang agreed to sell a 56.15 percent interest in senior care provider Pine Care Group to local developer Chinachem Group for HK$451 million, as well as flogging an industrial building in the New Territories to Australia’s Goodman Group for HK$520 million.
One month before that deal, the family reportedly sold a senior home in Kowloon City to local developer K&K Property for HK$1.14 billion, taking a loss of HK$160 million on the deal.
The asset sales have continued into 2023, with the disposals of a serviced apartment and set of shops in Kowloon at markdowns.