Hong Kong property

China credit tightening won’t affect stake in HK$40 billion The Center, says Shimao’s Hui Wing-mau

Share in world’s most expensive office tower is my biggest personal investment in Hong Kong, says property tycoon

PUBLISHED : Tuesday, 27 March, 2018, 6:20pm
UPDATED : Tuesday, 27 March, 2018, 11:27pm

Hui Wing-mau, the chairman of Shanghai-based Shimao Property Holdings, has said his purchase of a stake in The Center, the world’s most expensive office building, will not be affected by a tightening in the mainland credit policy for overseas acquisitions.

“I’m a Hong Kong resident and have lived here for 40 years. My money is here and will not be affected [by the credit tightening],” he said in his first public comments – confirming an earlier report by the South China Morning Post – on the subject, while speaking exclusively to the Post ahead of Shimao Property’s results announcement on Tuesday.

Hui, ranked as mainland China’s 22nd richest man with a personal wealth of US$8.4 billion in 2017 by Forbes, confirmed he had agreed to acquire a 20 per cent stake in The Center, which is valued at HK$40.2 billion (US$5.12 billion), from Li Ka-shing’s CK Asset Holdings.

The purchase is his biggest personal investment in Hong Kong, he said. “I’m positive about the Hong Kong office market, and the city will benefit from the future development of the Greater Bay Area,” he said.

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Hui, 67, is a newly elected standing committee member of China’s top advisory body, the Chinese People’s Political Consultative Conference.

The Center, which was the tallest building in Li Ka-shing’s real estate portfolio, had been on the market for more than a year as its price excluded all but the richest buyers.

In November last year, a consortium calling itself CHMT Peaceful Development Asia Property Group emerged as a buyer, agreeing to pay the world’s highest price for an office tower.

I’m a Hong Kong resident and have lived here for 40 years. My money is here and will not be affected [by the credit tightening]
Hui Wing-mau, chairman, Shimao Property Holdings

The biggest shareholder in CHMT – representing 55 per cent of the consortium – was a little-known, Chinese state-owned company called China Energy Reserve and Chemicals Group. The rest of the pie was shared by four Hong Kong investors.

By February, China Energy had dropped out, snared by Beijing’s crackdown on overseas acquisitions and delays in securing approvals to remit funds abroad.

Hui and Pollyanna Chu Lee Yuet-wah, a co-founder of Kingston Financial Group, quickly stepped in.

China Energy’s stake would be split four ways, and Hui would own 20 per cent followed by Chu’s 17 per cent. The remaining 18 per cent would go to two of the four Hong Kong investors who already owned 45 per cent stakes in the building.

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These four shareholders comprised Hong Kong investors David Chan Ping-chi, Lo Man-Tuen, Raymond Tsoi Chi-chung and Ma Ah Mok.

The 73-storey tower in downtown Central has 1.2 million sq ft (111,483 square metres) of office space, 13,000 sq ft of retail space and 402 car parking lots.

The building, completed in 1998, is entirely a steel structure without a concrete core. Its iconic lobby was featured in the Hollywood film The Dark Knight.

Shimao Property, which holds 47.9 million square metres in land reserves in 47 cities on the mainland, reported a 51.6 per cent increase in net profit to 7.84 billion yuan (US$1.25 billion) last year, thanks to strong property sales.

The company generated contract sales worth 100 billion yuan in 2017. Its revenue increased by 18.8 per cent to 70.43 billion yuan for the year ending December, 2017. A final dividend of 60 HK cents will be paid.

Shimao Property is also part of a five-member consortium that won the tender for the waterfront site in Cheung Sha Wan for HK$17.28 billion last November, making it the most expensive residential plot in Hong Kong.

The company also holds a luxury residential site in Kowloon Tong and a hotel site in Tung Chung, which it won through government tenders four years ago.

“The value of our land in Hong Kong has been surging sharply. We will speed up the pace of construction and put on the market for sale,” said Jason Hui Sai-tan, the company’s vice-chairman and Hui’s son.

Shares in Shimao Property rose by 4.46 per cent to close at HK$21.05 on Tuesday.