Reit pioneer a team player
Stephen Chu is putting his money where his mouth is.
He is chief executive of Hui Xian Asset Management, which manages Cheung Kong (Holdings)-controlled Hui Xian REIT, a real estate investment trust that is the first yuan-denominated initial public offering made on the Hong Kong stock exchange.
Hui Xian's core asset is Beijing-based Beijing Oriental Plaza, a 580,000 square metre shopping, commercial and hotel complex.
The complex employs about 570 staff on the mainland for a wide range of jobs including hotel services and property services, such as leasing.
Chu has bought shares, or units, in the Hui Xian REIT four times since its listing on April 29, because he thinks it will make him more attuned with what investors want.
It's a practice he has followed in the past with another reit he managed. Toronto-born Chu moved to Hong Kong in 1993 and joined Sino Land.
He took a job at Cheung Kong 13 years ago and has held a number of positions with the company, including being chief executive of ARA Asset Management (Prosperity).
That company, in turn, manages another Cheung Kong-controlled reit named Prosperity REIT, which owns commercial properties in Hong Kong.
While Chu thinks he figured out the art of managing reits, he's still working on mastering Chinese.
What are the major differences of doing business in Hong Kong and on the mainland?
There are a lot more similarities than I first anticipated. I would have thought there are big differences. But when you break it down to basic levels, there are not many.
What are your plans for Hui Xian Asset Management? What direction will it take in the next five years?
We should look at the trend, [and] fully understand this quickly evolving middle class on the mainland. Working closely with tenants, moving tenant mix [selecting and locating tenants to maximise the landlord's income], and building relationships with tenants are important.
What about growth through acquisitions?
We have a lot of driving power for acquisitions, I like first-tier cities and good locations in second-tier cities. We have established a new team on July 22 to have offices in Beijing, Chengdu and Shenyang to look for acquisition opportunities.
Do you expect to make any in the next few months?
Give me a slightly longer horizon. Some [people] say we need diversification as we just have one property. But that is one property with four components - retail, office, hotel and apartments and all bring in revenues. But a little diversification does not hurt.
Your company is the pioneer of yuan-denominated shares on the Hong Kong exchange, so a lot of eyes are on you, yet the issue hasn't been popular with investors. What can you do about that?
I can only look at the results. When it was listed on April 29, our retail tranche was oversubscribed, our wholesale tranche was oversubscribed. It is a success for a listing. I think this is a matter of time when more people look at their investments, really understand the whole system, they may consider putting money into different vehicles.
I give myself as an example. I go to a bank and trade my [daily limit of] HK$20,000 into the yuan. What can I get for it?
The bank gives me 0.6 per cent, which is really nothing, or I can put it in a 'dim sum' bond, or I can put it into a reit, which is well-regulated. I keep my money in the reit in [yuan], the dividend is paid in [yuan], and I will get currency gains. I also get a healthy yield , which as of yesterday [August 24] is 5.59 per cent, plus a potential appreciation, Wow, the overall return is 10 per cent.
Who has been a big influence on your management style?
I believe a person in any career basically is a sum of all of the colleagues and seniors they have had. Each of them will have influenced you. It is the same thing for me. One among them is the late Yeung Kai-yin [who retired from the Hong Kong government in 1993, having served in several senior positions.]
We joined Sino Land on the same day in 1993. He is one of my heroes. I have never met a person even up to today as brilliant and well organised as this guy. From him, you can learn organisation skills, you can learn how to think.
What else is important to your leadership style?
What I try to use is the golden rule: treat others as you wish them to treat you. This applies to all levels. Teamwork is very important, it creates synergy and values.
What's your dream job? What would you do if you weren't doing this job?
I always wanted to be in real estate. I am in my dream profession. I was in real estate before I moved to Hong Kong in 1993. In 1993, there were a lot of people in Hong Kong thinking about getting a passport overseas such as from Canada. I flew to Hong Kong every three to six months selling properties in Canada.
The percentage by which Hui Xian Reit's total distributable income of 202 million yuan between April 29 and end-June exceeds forecast