A pair of funds managed by Blackstone are selling a Hong Kong-based self-storage company to a developer controlled by one of the city’s wealthiest families, according to a stock exchange announcement today.
Hanison Construction, which is majority owned by the Cha family of Discovery Bay fame, has agreed to pay HK$735 million ($94 million) to acquire Minibox, a provider of personal storage units in the city, from companies controlled by Blackstone Real Estate Partners VII and Blackstone Real Estate Partners Asia, according to the developer’s statement.
The acquisition by Hanison, which focuses on redevelopment projects in Hong Kong, comes as Blackstone continues to dispose of assets from its Real Estate Partners VII and Blackstone Real Estate Partners Asia funds.
Hanison Adds to Industrial Portfolio
Under the terms of the sale and purchase agreement, as described in the stock market announcement, Hanison is acquiring the equity and shareholder loans associated with the operating firm and the property holding company that comprise Minibox. The acquisition provides Hanison, which already has a portfolio of four major significant industrial assets in Hong Kong, with three additional properties used by the storage business.
The most substantial of these assets is the Minibox Tower, a 68,296 square foot (6,345 square metre) industrial facility formerly known as the Minico Building (美利倉大廈) at 18 Lee Chung Street, next to the Chai Wan MTR station on eastern Hong Kong island.
The acquisition also gives Hanison additional space at the neighbouring Chaiwan Industrial Centre at 20 Lee Chung Street, and several units at the Kwun Tong Industrial Centre on Kwun Tong Road in Kowloon East.
Self-Storage Sounds Nice, But Real Estate Looks Good Too
The deal also gives the property developer possession of a 16-year-old self-storage operator, which makes lockers and rooms available to denizens of Hong Kong’s famously cramped homes to store their extra gear on a month to month basis.
In 2018 Minibox had net profit after taxation and extraordinary items of $17.9 million, up from $7.6 million in 2017.
However, Hanison’s rationale for purchasing the company appears to focus more on the value of its real estate assets than on the future of personal storage. “The Directors consider that the Acquisition is a valuable investment opportunity for the Group,” Hanison noted in its statement, adding that, “Accordingly, the Directors believe that the Acquisition will enable the Group to strengthen and enhance the property investment portfolio.”
Hanison representatives had not yet responded to requests for comment by Mingtiandi at the time this article was published. The company, which is chaired by Payson Cha, is controlled by the same family that holds a majority stake in Discovery Bay developer Hong Kong Resorts International (HKRI).
Under the terms of the sale and purchase agreement, Blackstone agrees to pay any costs associated with rectification work on the properties that had previously been registered with Hong Kong’s Lands Department.
Blackstone Learns to Love Logistics Large and Small
For Blackstone, the sale comes just over one month after the fund manager had agreed to purchase a much larger set of storage assets, when it signed up to buy Global Logistic Properties’ US portfolio for a record $18.7 billion.
In Hong Kong, Stephen Schwarzman’s investment team had acquired what was then known as Minico Asia in February 2015, for a reported HK$420 million.
Shortly after that deal was reported, ownership of Minico’s facility at 18 Lee Chung Street was transferred to a company named Storage Holding I Ltd in return for consideration of HK$395 million, according to records with Hong Kong’s Land Registry.
Blackstone has not offered a rationale for selling Minibox at this time, however, the age of the two funds that held the company suggests that the private equity firm may have been looking to sell assets in order to distribute returns to investors.
Blackstone Real Estate Partners VII reached a final $15.8 billion close in October 2015 and the debut Blackstone Real Estate Partners Asia fund closed on $5 billion in financing in December 2014.
The US private equity titan is in the process of raising an expected $18 billion for its global Blackstone Real Estate Partners VIII vehicle and closed on $7.1 billion for Blackstone Real Estate Partners Asia II in June last year.
When contacted by Mingtiandi sources at Blackstone declined to comment beyond the information available in Hanison’s statement.