Hong Kong property

Henderson Land sells North Point office tower to Shenzhen firm for record US$1.27 billion

Price tag – at about HK$30,169 per square foot – is record for office building in district

PUBLISHED : Friday, 05 January, 2018, 8:45am
UPDATED : Friday, 05 January, 2018, 11:14pm

Henderson Land Development has agreed to sell a Grade A office building in North Point, a non-core business district in Hong Kong, for HK$9.95 billion (US$1.27 billion) to Shenzhen-listed financial institution China Create Capital.

The brand new 22-storey office building, which has a total gross floor area of 329,800 square feet, is located at 18, King Wah Road, close to Harbour Grand Hong Kong Hotel.

The price tag equates to about HK$30,169 per sq ft, a record for office space in North Point.

Henderson Land confirmed the sale on Thursday night but the spokesman said “nothing can be added at this moment”.

“The building is new and commands a full sea view. It has attracted quite a number of suitors among mainland enterprises,” said people familiar with the deal.

An agreement was signed between Henderson Land and Fans Group – a wholly owned subsidiary of China Create Capital – for the sale in Macau on Thursday night.

Fans Group is involved in private equity funds, wealth management, securities investment, asset management and fintech since it was founded in 2014.

China Creative Capital, chaired by Zhang Wei, has been active in the equity market – it paid HK$300 million for a 15.98 per cent stake in Hebei Construction, which was listed on the Hong Kong stock exchange last month. In 2012, it also took part in a 10 billion yuan private equity fund with other mainland companies to nurture start-up companies.

But Zhang, 45, and his companies were also been penalised and fined a total of 330,000 yuan by the China Securities Regulatory Commission in 2015 for breaching disclosure rules related to Shanghai New Huangpu, an A-share developer.

Taiping Trustees, a unit of state-owned China Taiping Insurance Group, said it would provide financing for the deal.

China Create Capital was unavailable for comment on Friday.

“[Beijing’s] control on capital outflows does not hinder Chinese companies to come to Hong Kong,” said Raymond Cheng, an analyst at CIMB.

[Beijing’s] control on capital outflows does not hinder Chinese companies to come to Hong Kong
Raymond Cheng, CIMB

The latest deal comes two months after a consortium C.H.M.T Peaceful Development Asia Property agreed to pay tycoon Li Ka-shing a record HK$40.2 billion for his stake in The Center, an office in the central business district, in what agents say is the world’s most expensive transaction for a single building.

The consortium is 55 per cent owned by a unit of the mainland’s state oil behemoth China Energy Reserve & Chemicals Group, with the remaining 45 per cent shared by four Hong Kong businessmen.

Li Ka-shing sells The Center in US$5.15 billion record deal to trim his flagship’s Hong Kong assets

Cheng estimated that Henderson Land would earn as much as HK$5 billion from the deal.

Shares of Henderson Land rose 1.8 per cent to close at HK$53.45 on Friday.

“The average selling price of HK$30,169 marks a record high for North Point offices and implies an investment return rate of around 1.8 per cent to 2.5 per cent on a rental rate of HK$50 to HK$70 per sq ft,” he said.

Stanley Wong, executive director of capital markets at CBRE Hong Kong said there was still no indication as to when the mainland Chinese capital outflow restrictions will be relaxed.

“But this recent acquisition will likely push the authority to move forward with the approval process,” he said.

Mainland investors splashed out a total of HK$37.5 billion to acquire major office blocks in Hong Kong last year, more than double from HK$18.7 billion in 2016, according to CBRE, which kept tabs on deals valued at above HK$77 million each.