CSI buys AXA head office for $778m

PUBLISHED : Thursday, 22 June, 2006, 12:00am
UPDATED : Thursday, 22 June, 2006, 12:00am

Capital Strategic Investment (CSI), a listed property investment company, has bought AXA Insurance's head office in Wan Chai for $778 million.

Capital Strategic marketing and leasing department head Barry Ho Lok-fai yesterday said the company won with the highest bid. It will control 50.5 per cent of the entire AXA Centre, including 100,000 square feet of office space, retail space, outer wall signage and 89 car-parking spaces he added.

'The office spaces are on the high levels of the building. The purchase price is reasonable, given that the asking price of lower-level offices owned by individual buyers is $5,500 per sq ft,' Knight Frank Petty investment director Raymond Fung said. 'The supply of large office space with parking space in prime areas is limited. That's why it attracted investors.'

Based on the tender, AXA will lease back the office space and parking space for at least four years at $2.13 million a month for the first three years. Annual rental income of the property was $39 million and provided a rental yield of 4.9 per cent, Mr Ho said. 'We expect the rental yield will rise to more than 5 per cent by the end of this year when the leases of retail tenants come up for renewal,' he said.

The insurance firm owned 10 floors of offices, retail shops and car-parking space with a total gross floor area of 146,000 square feet.

CSI last month announced a plan to raise $631 million from the sale of convertible bonds and new shares to raise $1 billion for property investment.

CB Richard Ellis was appointed to handle the tender which closed on June 9. More than six ventures submitted bids for the property.