Hui Wing Mau, chairman of defaulting real estate developer Shimao Group, has agreed to sell his 40 percent stake in a luxury project in Hong Kong’s Deep Water Bay for a total consideration of HK$1.04 billion ($134.2 million), according to a filing with the Hong Kong stock exchange last week.
The real estate tycoon is offloading his interest in the high-end residential development at 15 Shouson Hill West to an 80:20 joint venture by mainland developer CC Land and Hong Kong-listed CSI Properties. The remaining 40 and 20 percent stakes in the property are held by Emperor International Holdings, the property division of Hong Kong conglomerate Emperor Group, and mainland property developer Mingfa Group (International).
The disposal sees Hui cashing out of the city’s red-hot luxury market as high-end home prices are predicted to rise by as much as 5 percent this year, according to a Knight Frank report published in December.
Hui’s sell-off follows his company’s rapid sales of three projects on the mainland over the last week totalling more than RMB 7.3 billion ($1.1 billion), including the Hyatt on the Bund hotel and a plot of land on Huangpu Road in Shanghai, together with a 26.67 percent interest in a Shenzhen joint venture with Agile Group, COLI and Country Garden Holdings.
On His Hui Out
In his latest asset disposal, Shimao’s Hui is cashing out of the project in Shouson Hill, home to Hong Kong billionaires including CK Asset’s Li Ka-Shing and Alibaba’s Joe Tsai.
Located at the junction between Shouson Hill Road West and Wong Chuk Hang Path, the luxury residential project comprises 15 detached villas yielding a combined 88,000 square feet (8,175 square metres) of gross floor area.
Spanning a 116,896 square foot site, the project is less than a 3 kilometre (1.9 mile) drive from the Aberdeen Tunnel, a route that shortens the travel time between Wong Chuk Hang and Causeway Bay, one of Hong Kong’s busiest commercial districts.
Given the purchase price for Hui’s 40 percent stake, the project’s total value would have been about HK$2.6 billion — still lower than the price paid for the site of HK$2.7 billion, amounting to HK$30,888 per square foot of maximum floor area, in 2014.
At the time of the site’s purchase, the project was scheduled for completion in 2017. By the end of last year, however, local media reported that Emperor Group expected sales to begin in 2022, following the completion of the luxury villas four years after the expected date.
Should the average sales price of all units in the property exceed HK$70,000 per square foot, Hui would be entitled to receive 30 percent of 40 percent of the project company’s net profit, according to terms of the shareholders’ agreement.
To provide initial financing for completion of the acquisition, CC Land and CSI Properties will each contribute up to HK$976 million and HK$244 million respectively upon signing of the shareholders’ agreement, which would be proportionate to their respective interests in the joint venture shares.
The joint venture partners are once again teaming up to acquire a Hong Kong residential project, having purchased the Octa Tower in Kowloon Bay from Nan Fung together with Asia Standard International Group (ASI) for HK$8 billion in 2018.
CSI Properties has also worked with Chongqing-based CC Land’s chairman, Cheung Chung Kiu, after the Hong Kong-listed developer in 2017 sold a plot on Henderson Road in Jardine’s Lookout to the mainland tycoon for a reported HK$600 million.
In a rush to raise cash, the Hui-controlled Shimao Group last week agreed to sell the Hyatt on the Bund in Shanghai to a property investment firm controlled by the city government for RMB 4.5 billion. A week before that disposal, the developer announced that it was selling a site at 199 Huangpu Road in Hongkou district to a unit of the Shanghai Municipal State-owned Assets Supervision and Administration Commission for just over RMB 1 billion.
On top of the two Shanghai sales, Shimao on 24 January announced the disposal of its 26.67 percent interest in a Shenzhen joint venture with Agile Group, COLI and Country Garden Holdings for RMB 1.84 billion.
Following the latest Shanghai disposal, the group’s Hong Kong-listed shares have risen 4.5 percent in price since last Friday, though over the past six months the price per share had declined by more than 64 percent, closing at HK$5.72 on Monday.
In Hong Kong, the group in December sold its 22.5 percent stake in a Kowloon luxury residential project at a loss of HK$770 million for an aggregate consideration of HK$2.08 billion.
Shimao Group’s total liabilities stood at RMB 463.6 billion in the six months ending 30 June 2021, according to its latest interim report, up 11.8 percent from RMB 414.3 billion in the same period of the preceding year.