Hong Kong property

Lo family’s Champion REIT offers to sell Langham Place office tower for HK$26 billion

PUBLISHED : Monday, 17 July, 2017, 8:55pm
UPDATED : Tuesday, 18 July, 2017, 11:03pm

Champion Reit, the real estate investment trust controlled by the Hong Kong family behind Great Eagle Holdings, is offering its office tower at Langham Place in Mongkok for sale with an estimated price of HK$26 billion (US$3.33 billion).

The landlord is targeting mainland buyers, according to property consultant Savills.

Langham Place Office Tower, which is the second highest commercial building in Kowloon, is under global tender sale by Savills, as appointed by owner Champion Reit.

China Life Insurance buys Hong Kong office tower for HK$5.85 billion

Great Eagle owns 65.6 per cent of Champion Reit. Lo Ka-shui is chairman of both the Champion Reit and Great Eagle.

The family is currently locked in a court battle over the role of HSBC as trustee of the family business.

“The sale targets mainland enterprises,” said Raymond Lee, chief executive of greater China at Savills. “So far, two to three companies have expressed interest. We anticipate the buyer will use the tower as its regional headquarters and for leasing.”

When asked if the mainland’s capital controls would affect the sale, Lee said care would be taken to approach the right buyers.

“We will approach mainland companies that we know have enough capital in Hong Kong already,” he said.

Lee anticipates the indicative price for the 59-storey property is between HK$24.5 billion and HK$26 billion, or more than HK$35,000 per square foot.

Champion Reit acquired the office tower and shopping mall at Langham Place from Great Eagle Holdings for HK$12.5 billion in 2008, according to Wikipedia. It said the value for the office portion at the time was HK$6,815 per sq ft.

Lee said the 225-metre tower was a rarity in Mongkok, as it is the only iconic grade A office tower for sale in the area. He added that adjacent facilities such as Langham Place Mall and the Cordis Hotel, added to the value of the office property.

Lee said he would not entertain proposals to sell parts of the tower, adding that a complete sale would add a 30 per cent premium. “We will not sell the tower as separate units,” Lee said.

Income from the Langham Place tower was HK$295 million (US$37.8 million) for the fiscal year 2016. The figure was 4 per cent more than the previous year, but net property operating expenses also rose 31 per cent to HK$29 million.

The tower offers over 770,000 square feet of office space, and has a daily footfall of 250,000 to 300,000, according to Savills.

Lee noted that office properties have appreciated sharply in what appears to be a long term trend.

“The values of office towers sold in previous years have surged,” Lee said. “The market trends upwards.”

Hong Kong-listed shares of Champion Reit jumped 1.5 per cent to close at a record HK$5.60 on Monday.