Swire Properties Limited, one of Hong Kong’s largest owners of offices and shopping centres, said it is in discussions to sell a 21-storey office building on the eastern side of Hong Kong Island, as it picks up the pace on an asset-disposal programme after its parent posted the first interim loss in half a century. The company said it’s in talks to sell Cityplaza One at the Taikoo Shing project in Quarry Bay, although “no agreement for the disposal has been reached,” according to its statement to the Hong Kong stock exchange. Trading in the shares of Swire Properties and its parent Swire Pacific Limited were halted for the announcement. Swire Properties’ interim core profit plunged 80 per cent to HK$3.75 billion (US$484 million), as rental income from offices, retail stores and restaurants at shopping centres, as well as hotel occupancy at its Pacific Place mixed-use complex in Admiralty plunged amid dwindling business and leisure visitor numbers. The developer offered 227 car parking space and 62 motorcycle lots for sale two weeks ago , the first time it put the “noncore assets” at its 43-year old Taikoo Shing housing project on the market, aiming to generate at least HK$690 million from the entire disposal at HK$3 million for each car space. Swire Pacific, one of Hong Kong’s largest and oldest conglomerates and the 82 per cent owner of Swire Properties, swung to its first interim loss since 1974, as its Cathay Pacific Airways unit was weighed down by the unprecedented travel slump from the coronavirus pandemic. The conglomerate, which owns Cathay Pacific, earned HK$15.85 billion in first-half profit last year. Cathay Pacific, Hong Kong’s flagship carrier, received a HK$39 billion financial bailout from the government in June to survive the slump in the global aviation industry. Still, it had to axe 8,000 jobs worldwide – two-thirds of them in Hong Kong – and shut down its Cathay Dragon regional carrier, to downsize amid a shrinking aviation market. “It is better to sell it now, [to] help the company shore up its cash flow in the meantime as the Cityplaza One is old and it will cost the company more to renovate it,” said Vincent Cheung, managing director at Vincorn Consulting and Appraisal. “It also reflects the diminishing possibility for office rent to recover [anytime] soon back to its peak level.” Cityplaza One, with a gross floor area of about 629,000 square feet (58,400 square metres), is home to companies like Marriott International, MSIG Insurance and AT&T. The Taikoo Shing project was built on the site of the former Taikoo Dockyards, which traces its history to the late 19th century during British colonial days under the ownership of John Swire and Sons, the ultimate owner of the Swire Group. The Grade A office tower, completed in 1997, is said to have received an offer of HK$10 billion (US$1.3 billion), or HK$15,900 per square foot, according to industry sources. “At HK$15,900 per sq ft, that’s cheaper than Cityplaza Three and Cityplaza Four towers” sold in 2018, Cheung said. “The time has changed, and it is a reasonable price at this moment. You may not even get this price, if you don’t cash out now.” Swire Properties sold the two office towers for HK$15 billion two years ago, or about HK$19,000 per sq ft, to Hengli Investments Holding (Group) and the real estate private equity firm Gaw Capital Partners . “The potential disposal, if realised, may not result in a substantial gain on disposal as we believe the transaction value would be close to its mark-to-market book value,” said Raymond Cheng, managing director and head of Hong Kong/China property research at CGS-CIMB Securities in Hong Kong, who values the building at between HK$9 billion and HK$11 billion. “We believe a special dividend for the potential disposal is unlikely, as Swire prefers recycling capital obtained from asset disposal to new projects.” Swire Properties said it remained committed to Hong Kong, and would continue to invest and grow in it. “Our long-term strategy for our home market has not changed. The decision to dispose of certain non-core assets in recent years is in line with our business strategy to further fuel growth,” it said in a statement. “It provides opportunities for us to recycle capital and channel it into new projects which are under construction; explore new investments; and further develop core assets including Taikoo Place and the Pacific Place neighbourhood.” Swire Properties is building a solid pipeline of new residential projects in Hong Kong, with the recent launch of Eight Star Street in the Starstreet Precinct in Admiralty as well as two upcoming developments in Wong Chuk Hang station and Chai Wan. Swire Properties’ shares continued their declines after the lunch trading pause and after the company’s statement, falling 0.2 per cent to HK$20.55, while Swire Pacific’s stock fell 0.3 per cent to HK$36.75 on the Hong Kong exchange.