Brookfield is beefing up its self-storage portfolio with an acquisition in eastern Hong Kong Island from local builder Hanison Construction which marks its third reported investment in the sector so far this year.
The Canadian investment giant this week took possession of a pair of units in the Chai Wan Industrial Centre, as well as a ground floor parking area in the Chai Wan district property, sources familiar with the transaction told Mingtiandi, confirming reports from local media reports of the HK$55 million ($7 million) deal.
Both rooms were already being leased by Brookfield’s RedBox self-storage business prior to the acquisition, as the Toronto-based investor continues to expand its bets on the sector.
Brookfield has been actively growing its RedBox portfolio following its buyout of the local storage operator in March, with the latest purchase coming four months after it spent HK$211.3 million for a set of industrial assets in the New Territories during May.
Cramped Quarters Boost Storage Demand
With the new units spanning 7,743 square feet (719 square metres), Brookfield is paying the equivalent of HK$7,103 per square foot of storage space in the 23-storey industrial building at 20 Lee Chung Street, located in the easternmost part of Hong Kong Island.
“Chai Wan, being a sub-district of Hong Kong Island East, favours the operation of mini-storage premises as there are more aged industrial building,” said Alex Leung, senior director at CHFT Advisory and Appraisal. “‘Rents of these industrial premises are lower, and the area is directly served by the MTR railway,” he added.
Completed in 1976, portions of the ageing building had previously been converted for self-storage purposes, including the fourth-floor units leased to RedBox, as well as other facilities on the 8th, 12th, 14th and 17th levels.
Mingtiandi understands the acquisition is part of Brookfield’s expansion plan in the city’s self-storage sector, with JLL having brokered the deal. Representatives of RedBox and Brookfield declined to comment.
Hanison Ties in Action
RedBox’s latest acquisition comes just a few months after the company had paid Hanison HK$211.3 million to purchase 34,525 square feet of space in the Shatin Industrial Centre in the New Territories for conversion into self-storage use.
CHFT’s Leung said high population density and cramped living spaces in the Asian financial hub has been driving the local self-storage market.
There are 690 self-storage facilities across the city based on public data compiled by the consultancy, a fifth of which or about 144 units are concentrated in Hong Kong Island’s Eastern district – the highest among all 18 districts, and more than double the volume in Kwun Tong and Kwai Ching
Hanison in Sell Mode
Hanison, a local developer controlled by the Cha family of Hong Kong Resorts International, is exiting the Chai Wan assets three years after acquiring them in 2019 as part of its HK$735 million buyout of the Minibox storage business from Blackstone.
The disposal follows a series of divestments by Hanison over the past year in an attempt to unlock the value of assets and raise cash, as its overall revenues dipped by one percent in the financial year ending March 2022.
Apart from the self-storage units it sold to Brookfield, Hanison in August 2021 also sold a half stake in a redevelopment project at 18 Lee Chung Street in Chai Wan to a fund managed by US-based private equity firm AEW.
That HK$305 million deal gave AEW an interest in a 96,264 square foot industrial project which is located right beside Brookfield’s acquisition this week.
On the same day that it announced the Lee Chung Street disposal, Hanison revealed its HK$628 million en bloc sale of 1 Tai Yip Street in Kowloon’s Kwun Tong area to Horman Investment, a firm controlled by shipping magnate Charlie Le.
Mini-Sheds Stay Hot
Brookfield had acquired RedBox from InfraRed NF, a joint venture of local developer Nan Fung Group and British investment firm InfraRed Capital Partners a half year ago, as fund managers search for opportunities self-storage in Asia’s gateway cities.
The Canadian firm’s rivals at Blackstone last year bought the Elegance Printing Centre in Shau Kei Wang for HK$500 million, with plans to convert the seven-storey industrial block into a self-storage hub as part of its joint venture with local operator Storefriendly.
The JV also last year opened the Storefriendly Tower in Kowloon East’s Kwun Tong area after purchasing the former New Media Tower for HK$508 million in April 2021 and converting it for self-storage use.