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Hong Kong property

Vanished oil tycoon Ye Jianming’s office floors in Hong Kong put on sale again within a month of failed auction

  • The three floors of office space at Convention Plaza in Wan Chai, for which CEFC paid a record HK$1.38 billion (US$180 million) in 2016, will be closed for tender on January 30
  • They were withdrawn from sale in November because none of the bids met the receivers’ undisclosed target price
PUBLISHED : Wednesday, 26 December, 2018, 6:27pm
UPDATED : Thursday, 27 December, 2018, 10:45am

A distressed asset formerly owned by the fallen oligarch Ye Jianming’s China Energy Finance Corp (CEFC) is on the market again after its first auction flopped in November.

The three floors of office space at Convention Plaza in Wan Chai, for which CEFC paid a record HK$1.38 billion (US$180 million) in 2016, will be closed for tender on January 30 at noon, according to JLL, which was appointed as sole agent for the public tender by the receivers of the property.

“It is to be sold on an ‘as-is’ basis, partially with tenancies and partially vacant,” said JLL on Wednesday without disclosing the reserve price.

Three levels of Convention Plaza in Wan Chai sell for record price

The 21st, 22nd and 23rd floors were used to secure mortgages from Industrial and Commercial Bank of China (Asia) and Hammer Capital Private Investments. according to documents from the Land Registry.

In November the three office floors were put up for auction in what was the largest distressed sale of commercial property this year, with opening bids of HK$478 million, HK$480 million and HK$482 million respectively.

But the properties were withdrawn from sale because none of the bids met the receivers’ undisclosed target price.

If the sale had gone through at the opening price, it would have generated HK$1.44 billion for the receivers, or HK$29,059 per square foot.

In October, a 8,131 square-foot office unit on the 34th floor of Convention Plaza changed hands for HK$302 million, or HK$37,117 per square foot, according to data held by Centaline Property Agency.

Ye’s CEFC bought the office floors through two separate firms, Tactic Ally and Dunhan Ventures, Land Registry data showed.

Thomas Lam, an executive director at Knight Frank, said investors were being more cautious in the current market about big acquisitions of this kind costing more than HK$1 billion.

“Investors are taking a wait-and-see attitude in anticipation of more rounds of rising interest rates. And the ongoing disputes between the US and China in their trade war are hurting their mood,” he said.

China detains CEFC’s founder Ye Jianming, wiping out US$153 million in value off stocks

Ye has not been seen in public since the start of Lunar New Year celebrations on February 16. Although he has not yet been formally charged with any crime, he is believed to be in detention helping Chinese regulators with unspecified investigations.

The Wan Chai office is part of CEFC’s wider property portfolio, which was valued at around 21.6 billion yuan (US$3.13 billion) as of March 1.

Sources said a creditors’ committee led by China Development Bank was set up to dispose of all the properties, after Ye was detained.

Early this month, a senior executive in Ye’s conglomerate, also a former minister in Hong Kong, Ho Chiping, was convicted by the New York Southern District Court of bribery and money laundering over oil rights for CEFC China Energy in Chad and Uganda.

Just last year CEFC’s staff hosted executives and officials managing the oilfield in Chad in its Wan Chai office.

A year earlier, the company announced it was taking over a 35 per cent stake in oil blocks in Chad from Taiwan’s state-owned Chinese Petroleum Corp for about $110 million. That was CEFC’s first step into upstream oil exploration and production.

CEFC rose spectacularly from obscurity to become China’s fourth-largest oil conglomerate in the space of a few years.

Its rise was helped by China Development Bank, which pledged billions of dollars to the private firm to finance its aggressive expansion and headline-grabbing acquisition deals, including a failed attempt to buy a 14 per cent stake in Russian oil giant Rosneft.

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