HK Investor Lai Wing-to Marketing London West End Buildings as Asset Sales Continue

Hong Kong investor Lai Wing-to is shopping a trio of mixed-use properties in London’s posh West End area, reversing a decade of acquisitions in the British capital as commercial property values decline and retail sales remain subdued both at home and in the UK.

Known colloquially as the “Ten Billion Shop King” for earning his fortune through street shop and retail property investments over the last three decades, Lai has engaged JLL to manage the sale of Standbrook House at 2-5 Old Bond Street, 291 Oxford Street & 2 Harewood Place, and 147-155 Wardour Street, with the properties collectively dubbed the “Trinity Portfolio.”

With his property holdings once estimated to be worth HK$15 billion (US$1.9 billion), Lai is now offloading assets as Hong Kong retail sales for last year fell 16 percent short of 2018 levels, with the UK shopping market also remaining below pre-pandemic standards, according to government statistics.

“It’s a great portfolio that has been strategically assembled over time, and we’ve already captured a lot of interest globally, the majority of which are European private offices with a long-term generational mindset. While we’re not selling at peak pricing, there is still healthy competition for these assets,” Jonathan O’Regan, director of Central London capital markets at JLL told Mingtiandi, adding that the brokerage has fielded interest from investors from multiple geographies.

The London assets are hitting the market just weeks after Lai began pushing a pair of commercial properties worth an estimated HK$600 million in Hong Kong’s Causeway Bay and Central districts, with the investor’s HK$460 million oceanfront mansion now also on the block.

Prime Area

The Trinity Portfolio has a blended occupancy of 93 percent and weighted average unexpired lease term of 9.4 years, with combined annual rental income of £11.1 million. The assets are being offered on an individual basis or as a package.

Standbrook House, the crown jewel of Lai’s London portfolio, is a 23,625 square foot (21,915 square metre) freehold property in the Bond Street luxury retail district with flagship stores for luxury watchmaker Richard Mille and apparel brand Tod’s occupying the 10,246 square feet of retail space on the building’s basement, ground, and first floors.

The second through fifth floors of the eight-storey block have 11,924 square feet of self-contained grade A offices and the top floor has 1,455 square feet of residential space divided between two flats.

Lai, who acquired the property for £152.5 million from UK insurer NFU Mutual in December 2018, had entered into an agreement last year to sell the property to Richard Mille for a reported £170 million, but the transaction failed to materialise.

Lai currently collects £4.7 million in annual rent on the fully occupied property, with JLL noting that the building’s retail rent of just under £1,200 per square foot falls below average prime rents in the area, which exceed £2,500 per square foot. The property’s average office rent of £85 per square foot is also below the £200 per square foot par for offices in the Mayfair area.

“The Central London retail investment market has remained resilient despite global headwinds experienced due to the rising cost of debt,” JLL said in the marketing document for 291 Oxford Street. “Investors have been attracted to the secure nature of prime retail investments in London and with a buoyant occupational market giving confidence to investors with expectations of rental growth.”

Located a 14-minute walk north from Standbrook House between the Bond Street and Oxford Circus Underground stations on London’s famed Oxford Street retail strip, the 26,161 square foot freehold property has 10,863 square feet of retail space on the basement, ground, and first floors and 15,298 square feet of office space spanning the second through fifth floors.

Lai purchased the property for £76 million in 2013, with the 70 percent occupied building now  generating £4.4 million in annual rent.

Situated half a mile (0.8 kilometres) east of 291 Oxford Street in the Soho area, 147-155 Wardour Street is within walking distance to Tottenham Court Road, Oxford Circus, Piccadilly Circus and Leicester Square Underground stations. Lai purchased the building for £49 million from New York-based real estate private equity firm Thor Equities in 2018.

The 27,123 square foot freehold property is fully occupied and earns annual rent of £2.0 million, which works out to an average of £67.65 per square foot on the office portion and an average of £87.50 per square foot on the F&B space. This compares to prime Soho office rents of £120 per square foot and F&B rents in excess of £150 per square foot, according to JLL.

30 Percent Decline

Lai, who entered the UK market in 2010, revealed to Hong Kong media last year that properties in the British capital accounted for 30 percent of his investment portfolio, with the investor having spent hundreds of millions of pounds snapping up shops in the Soho and Mayfair areas in the decade leading up to the pandemic.

Lai told local media last year that the market value of his overall portfolio had fallen by about 30 percent from its peak due to the pandemic.

Back home, Lai put his mansion at 10A-10C Tai Tam Road in Hong Kong’s Southern district up for sale in October. The 8,792 square-foot residence, which Lai had purchased in 2019 for HK$350 million, now has a market value of HK$460 million, according to local media reports.

Earlier this month, Lai sold a ground floor shop in the Yau Kwong Building on Wan Chai district’s Hennessy Road for a reported HK$35 million, with that sale coming a few months after he offloaded 28 parking spaces at The Sun’s Group Centre in the same district for a reported HK$45.5 million.