Receivers Take Over Second Cheung Kei London Property as Asset Seizures Mount

Receivers have seized a second property in London’s Canary Wharf from troubled conglomerate Cheung Kei Group, adding to a recent string of asset forfeitures that include a pair of Hong Kong homes formerly owned by Cheung Kei boss Chen Hongtian.

Receivers from professional services firm Alvarez & Marsal have been appointed to take charge of 20 Canada Square, an office and retail building owned by Cheung Kei subsidiary Cheung Loong, on behalf of the mainland group’s creditors. Mingtiandi reported last month that receivers had wrested control of 5 Churchill Place, another Canary Wharf office block, from Cheung Kei.

Asset manager JLL and property manager BNP Paribas Real Estate will reach out to tenants and suppliers of 20 Canada Square to provide assurances over the continued operation of the 581,457 square foot (54,019 square metre) building, Alvarez & Marsal said in a release.

“The appointment of fixed charge receivers over the shares of Cheung Loong is not expected to cause any operational impact at 20 Canada Square, which will continue to operate as normal,” said Rob Croxen, managing director at Alvarez & Marsal Europe.

Wharf Wipeout

Cheung Kei bought 20 Canada Square from Brookfield Properties for £410 million ($530 million) in mid-2017, marking Canary Wharf’s biggest real estate deal in three years at that point in time. The 2003-vintage building’s tenants have included the trading division of oil giant BP and financial information provider S&P Global.

Canada’s Brookfield had bought the 12-storey building in 2005 for £326.4 million and put it up for sale in March 2017. Cheung Kei reportedly outbid Saudi Arabia’s Sidra Capital and a joint venture of Houston-based Hines and HSBC Alternative Investments for 20 Canada Square, which is on a virtual freehold.

JLL had been marketing both 20 Canada Square and 5 Churchill Place, with an account in Bloomberg indicating that Cheung Kei had failed to repay a £265.5 million loan on 20 Canada Square when it came due last October, with debt secured by 5 Churchill Place maturing in April of this year.

Cheung Kei is said to have put the two properties on the market with initial asking prices of £385 million for 20 Canada Square and £260 million for 5 Churchill Place, with a source familiar with the tender process indicating that the bids received had not been accepted by the family-owned mainland China player.

Home Groan

The pain is compounding for Cheung Kei chairman Chen Hongtian, as Savills this week began marketing the Shenzhen tycoon’s seized home at 15 Gough Hill Road on Hong Kong’s Peak via a tender sale conducted on behalf of receivers appointed by Chen’s creditors.

Chen made waves in Hong Kong in 2016 when he spent a record HK$2.1 billion (now $270 million) on the three-storey house after complaining that his 5,154 square foot apartment at Opus Hong Kong in Mid-Levels was too small.

The five-bedroom Opus unit was also seized and put on the block in May during the same week that Cheung Kei’s repossessed head office went up for tender sale.