An office block on London’s Canary Wharf which was once a trophy for the chairman of China’s Cheung Kei Group is being sold by receivers for £110 million ($134 million) — 60 percent less than what the mainland investor paid for the property in 2017.
Receivers appointed by Cheung Kei’s creditors to take over 5 Churchill Place in May of last year, have agreed to sell the 12-storey property for £110 million ($134 million), according to sources familiar with the transaction. A market source identified the buyer as Israeli real estate investment firm Ariomori Group, confirming details first reported by London’s React News.
Cheung Kei and its chairman Chen Hongtian had paid £270 million to acquire the one-time Bear Stearns headquarters in 2017, the same year that it also purchased 20 Canada Square on Canary Wharf. Receivers seized that 12-storey tower in June of last year and are now preparing to market the 581,457 square foot (54,019 square metre) building, according to market sources.
The distressed deal adds to a string of fire sales of London assets linked to mainland Chinese investors this month, with Guangzhou R&F Properties announcing earlier this week that it is selling its interest in the One Nine Elms development and media reports indicating that Country Garden is looking to dispose of its £450-million Ailsa Wharf residential project.
Help From the Middle East
The deal for Five Churchill Place values the property at £351 per square foot of its 313,000 square feet (29,000 square metres) of leasable area. Receivers from FTI Consulting had put the asset on the market in October, five months after seizing it on behalf of a syndicate of lenders.
Before the asset seizure, Cheung Kei and Chen had attempted to sell the 2009-vintage building for £260 million.
In marketing 5 Churchill Place, Savills highlighted the property’s location in the heart of the Canary Wharf financial district, its 985-year land lease and its long-term revenue stream.
Anchor tenant JP Morgan Markets provides 88 percent of the rental income from the building, which also welcomed French bank Credit Agricole and the World Association of Nuclear Operators as tenants in July.
The building generated £13.2 million in net passing rent per year with a weighted average unexpired lease term of 10.5 years, according to a Savills statement last year.
The property agency and FTI declined to comment on the transaction.
Next Asset Sale
A few blocks from 5 Churchill Place, receivers of 20 Canada Square have appointed Knight Frank to sell the property, two years after Cheung Kei failed to find a buyer at an asking price of £385 million. The mainland investor had paid £410 million to acquire the asset in July 2017.
In March of last year, receivers took control of Cheung Kei’s former headquarters in Kowloon’s Hung Hom area, and put the office property, which the mainland firm had acquired for HK$4.5 billion (then $580 million) in 2016, on the market two months later.
In August of last year receivers sold Chen’s former apartment in Hong Kong’s Mid-Levels at 38 percent below market value in a HK$420 million deal after the garments-to-property tycoon defaulted on a HK$500 million mortgage on the property.
Receivers seized Chen’s mansion at 15 Gough Hill Road on Hong Kong’s Peak last year, with that property still looking for a buyer.