Hopewell to spin off Hong Kong property arm
Property and infrastructure group Hopewell Holdings announced yesterday it would spin off its property and hospitality business in a separately listed vehicle in Hong Kong after its proposed HK$9 billion hotel project in Wan Chai finally got off the ground.
"We studied the possibility of a spin-off several years ago, but the land premium settlement for Hopewell Centre II two or three months ago was the trigger point for the initial public offering," managing director Thomas Wu said yesterday. He did not disclose the amount it hoped to raise from the listing.
In June, Hopewell agreed to pay a land premium of HK$3.73 billion for the site on which it is building Hopewell Centre II.
The proposed spin-off company, in which Hopewell will retain a 51 per cent interest after its listing, will be called Hopewell HK Properties. It will be involved in Hong Kong property development and investment, property-related services, and hospitality.
The plan comes as Hopewell has two major development projects under construction that will need about HK$13 billion over the next five years.
Wu said in August that Hopewell would inject HK$4.55 billion into Hopewell Centre II's construction from 2013 to 2015. Factoring in the HK$3.73 billion land premium, the total investment cost of Hopewell Centre II will be about HK$9 billion.
The 55-floor tower, due to be completed in 2018, will have a total gross floor area of 1.1 million square feet, and is expected to include a conference hotel with 1,024 guest rooms.
Hopewell also has to spend HK$4.5 billion for its 50 per cent share in a luxury residential-commercial project in Lee Tung Street, Wan Chai. Due to be completed in 2015, it will have 835,000 sq ft of gross floor area.
Its 3.03 million sq ft investment property portfolio, including its flagship Hopewell Centre, QRE Plaza and Wu Chung House, was valued at about HK$18.59 billion as of June 2012.
In a statement filed with the stock exchange, Hopewell said a proposal to separately list Hopewell HK Properties was submitted yesterday. "It is expected that the proceeds from the global offering will mainly be used for capital expenditures of projects under development (including Hopewell Centre II) and other future opportunities of the spin-off firm," the statement said.
For the year to June 2012, rental, property development, and hotel, restaurant and catering operations contributed HK$2.43 billion, or 37 per cent, of its total HK$6.56 billion turnover. During the period, gross rental rose 8 per cent to HK$707 million from a year earlier, while property development revenues declined 33.9 per cent to HK$1.26 billion.
After the spin-off, toll road investment will become the largest contributor to Hopewell's revenues, accounting for 36 per cent, or HK$2.38 billion, last year.