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Wharf's purchase of Crawford House in Central marks strategic shift

Acquisition of Crawford House from Wheelock comes as weak mainland development sector prompts move to focus on investment properties

PUBLISHED : Monday, 11 August, 2014, 2:15pm
UPDATED : Tuesday, 12 August, 2014, 5:01am

Wharf (Holdings) has acquired Crawford House from Wheelock & Co for about HK$2.69 billion, as part of a shift to focus more on investment properties given the softness in the development sector on the mainland.

"The company's future investment will focus on investment properties, from development properties. The purchase of Crawford House is the first step of the move, and we are now building investment properties on the mainland," said Stephen Ng Tin-hoi, deputy chairman and managing director of Wharf.

The deal for the commercial-office building in Central was announced as Wharf - in which Wheelock has a 54.8 per cent stake - posted a 12 per cent drop in underlying profit to HK$5.02 billion for this year's first half from last year, as development profits declined due to the sluggish mainland market.

Wharf said it agreed yesterday to acquire from Wheelock 100 per cent of Ridge, an investment firm that owns Crawford House in Queen's Road Central in the heart of the financial district.

As part of the deal, Wharf will also acquire the loan of about HK$66 million owed by Ridge to Wheelock.

Built in 1977, the 23-storey Crawford House has been independently valued at HK$5.79 billion. Completion of the deal is due by September 10.

"We have reservations on the mainland residential market and will not make new acquisitions in the short term," said Ng, adding that "the company would probably look for new investment properties on the mainland and in Hong Kong".

The core profit of its investment property division jumped 18 per cent to HK$3.75 billion in the first half from the same period last year. Ng said the book value of the company's investment properties amounted to HK$270 billion, ranking it among the top three publicly held portfolios.

The net profit of the development property division sank 46 per cent to HK$792 million on lower profit margins and a reduction in contributions from joint ventures and associates.

Ng said the company missed the sales target from its mainland residential properties in the first half, taking in about 9 billion yuan (HK$11.3 billion). He said it was uncertain if the company can hit its full-year sales target of 23 billion yuan.

The company's profit attributable to shareholders slumped 32 per cent to HK$11.7 billion. Revenue increased by 10 per cent to HK$16.32 billion. The company is confident its shopping malls will continue to outperform the market. Hong Kong retail sales in the first half of this year slipped 1.3 per cent.

Separately, Ng urged the Hong Kong government to ensure the liberalisation of the free-to-air television market by allowing new entrants to establish a meaningful foothold.

The market is dominated by current operator Television Broadcasts, according to Ng. Wharf's subsidiary i-Cable, through its Fantastic Television, obtained a free-to-air television licence last year.

Wharf shares yesterday closed up 1.35 per cent to HK$60.15.

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