China Motor Bus had purchased Albany House in 1999
China Motor Bus Company has agreed to sell a London office block, making the HKEX-listed firm the latest Hong Kong property investor to retreat from the British capital.
The former bus operator, which gained famed for introducing double decker buses to Hong Kong in the 1970s before transitioning into property development in the late 1990s, is selling Albany House in London’s Westminster area to UK-based real estate and hospitality firm Integrity International Group for £47 million ($62 million), or £8,751 per square metre.
The acquisition price represents a 34 percent premium to the property’s independently appraised value of £35 million as of 31 July, with China Motor Bus pointing to the disposal as helping to strengthen the company’s financial position and enhance shareholder value.
“The Disposal will unlock the value of Albany House, thereby enabling the Company to both enhance Shareholder value by returning cash to Shareholders and also to further strengthen the financial position of the Company,” China Motor Bus said in a filing. “The Disposal will remove any need for the Company to incur significant capital expenditure for, or to undertake the risk pertaining to, refurbishing or redeveloping Albany House amid the prevailing market conditions in the United Kingdom.”
25 Year Investment
Situated a nine-minute walk from Buckingham Palace on Petty France street, the freehold property adjacent to the St James’s Park Underground station measures 5,371 square metres (57,809 square feet) in office space across 12 storeys, along with 45 parking spaces at the basement and surface levels.
Henry Ngan, chairman of China Motor Bus Co Ltd
China Motor Bus acquired the 1972-vintage building as an investment property in late 1999, with the property being let to metro operator London Underground Limited on a 25-year lease. London Underground intends to vacate the property upon the lease’s expiry in December.
The property currently generates annual rent of £2.35 million from entities affiliated with London Underground, including its museum library and the London Transport Museum Friends charity, as well as the London Electricity Board, which rents a portion of the basement floor on a 99-year lease agreement that was signed in 1963.
China Motor Bus said it received an unsolicited offer for the property from Integrity International, which owns the adjoining 55 Broadway commercial building. The firm controlled by British hotelier Tony Matharu is planning to redevelop 55 Broadway into a 526-key hotel, with China Motor Bus indicating that Albany House could be incorporated into the project.
“The Purchaser is a special buyer and the offered price is likely to have taken into account at least some of the potential marriage value of the combined site of Albany House and its adjoining property,” China Motor Bus said in the filing.
The divestment of Albany House leaves the Scorpio House office block in London’s Chelsea area as the company’s sole remaining investment property in the UK.
Depot Developments
Established in 1924 as Hong Kong’s first bus operator, China Motor Bus pivoted into real estate after its franchise terminated in 1998, with the company having teamed up with HKEX-listed Swire Properties to develop projects on some of its former bus depot sites.
The pair are currently developing a 64,500 square metre residential and retail complex in Chai Wan, which will comprise three towers totaling 850 units, retail shops, and a covered public transport terminus. China Motor Bus, which holds a 20 percent stake in the project while Swire owns the remaining 80 percent interest, expects the first phase of the project to complete in the third quarter of 2025, with the second phase scheduled for completion in 2026.
China Motor Bus and Swire each also hold a half stake in the South Island Place office tower in Wong Chuk Hang. The 28-storey, grade A building was developed on the site of a former bus station and was 88 percent occupied as of 30 June.
Other joint developments by China Motor Bus and Swire include the Island Place commercial tower and adjacent apartment complex, as well as the Island Lodge residential and retail project, all of which are located in North Point.
China Motor Bus recorded a net loss of HK$161 million in the six months ended 31 December, continuing from a loss of HK$155 million in the fiscal year ended 30 June 2023.
London Exodus
China Motor Bus is the latest Hong Kong-based investor to divest UK assets amid property slumps both in London and at home, marking a reversal from the influx of Asian investment into the British capital in the years leading up to the pandemic.
Last month, Chinese Estates sold an office block at 14 St George Street in London’s Mayfair area to local developer and investor Oval Real Estate for £125.4 million. The HKEX-listed builder is also marketing an office block at 11-12 St James’s Square and reportedly weighing an exit from its flagship office redevelopment project at 120 Fleet Street in the City of London.
That same month, Hong Kong investor Lai Wing-to sold a commercial building at 147-155 Wardour Street to Singapore-based fund manager HECapital for around £35 million and offloaded an office and retail building at 291 Oxford Street & 2 Harewood Place to JP Morgan for £71.4 million. Lai has also been seeking a buyer for Standbrook House at 2-5 Old Bond Street.
In June, a private fund backed by New World Development’s Cheng family, Wharf Real Estate’s Woo family, and Far East Consortium International chairman David Chiu among other investors, cut the asking price for 3 St James’s Square, a grade-A office building located a 15-minute walk from 14 St George Street, by 13 percent.
In January, Oval teamed up with US investment firm Elliott Management in January to acquire a set of 27 assets from Langham Estate, a sprawling collection of West End commercial and residential properties owned by Hong Kong property tycoon Samuel Tak Lee.
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