Hong Kong billionaire Tang Shing-bor, known as the city’s “Shop King”, is trading an 80-room hotel in Wan Chai in exchange for a potential housing site in Sai Kung, a suburban area of the city, in a deal that involves properties worth a total of HK$1.43 billion.
According to a statement filed with the Hong Kong Exchange the CNT Group is selling its 143,252 square foot (13,308.5 square metre) industrial property in Sai Kung to Tang for HK$900 million.
Tang is paying the former paint-make both in cash, and in kind — by providing a hotel in Wan Chai that he acquired last year for HK$530 million to CNT Group under a sale-and-leaseback arrangement.
The deal allows Stan Group, an investment and hotel operator controlled by Tang Shing-bor’s son Stan Tang, to bring in a quick HK$80 million return on a property it purchased last year, while continuing to lease what is now the Minimal Urban Hotel in Wan Chai from CNT Group over the next three years as the company expands its hotel holdings.
The Shop King and Son Grow Their Empire
Under the the three-year leasing agreement included in the deal, Stan Tang and his hotel business, Tang’s Living, will pay HK$1.33 million per month to CNT Group, to lease what is now the 24-storey Minimal Hotel Urban from its new owner. CNT’s announcement to the exchange shows the company expects the hotel property to achieve a gross yield of approximately 3 percent per year.
Stan Group bought the 24,283 square foot property, formerly known as the Hotel Bonaparte, in August last year for HK$450 million before undertaking renovations of the property which were completed in February.
Stan Tang, 32, is Tang Shing-bor’s youngest son and is considered the Shop King’s successor. His company Stan Group owns a dozen properties in Hong Kong comprised of residential, commercial and industrial assets, mostly in Kowloon and the New Territories. The younger Tang’s three-year-old hospitality firm owns six restaurants, a spa, a gym, and eight hotels under three brands in Hong Kong.
CNT Sells Off Converted Site
In addition to gaining the Wanchai hotel CNT Group will walk away from the deal with HK$370 million in cash compensation for the Sai Kung site, which currently hosts a pair of four-storey industrial buildings.
In March of this year the paint maker turned property investor won approval from Hong Kong’s Town Planning Board to redevelop the Sai Kung land as residential property, however, the company now sees more promise in flipping the potential housing site to the Tang family.
“If the Group would re-develop the Sai Kung Property by itself, the re-development project would require a substantial amount of redevelopment costs and would take a relatively long period of time to complete a project, during which, the Group may encounter various uncertainties, including the fluctuation in the global and local economic and property market and the surge in the bank loan interests,” CNT Group in its statement.
CNT Group started as paint manufacturing company, but is now principally involved in property investment, iron and steel trading and investment holdings. The company said the disposal of the Sai Kung property would bring it a gain of approximately HK$494.4 million before tax and transaction costs.