Hong Kong office towers put on the block amid loan-payment conflict between owners
Gaw Capital and Hengli investments bought the buildings, known as 14 Taikoo Wan Road (Cityplaza 3) and 12 Taikoo Wan Road (Cityplaza 4), for US$1.9 billion in 2019
The owners of two grade-A office buildings on Hong Kong Island, known as 14 Taikoo Wan Road (Cityplaza 3) and 12 Taikoo Wan Road (Cityplaza 4),
are putting the towers up for sale amid a financing disagreement, five
years after buying the assets for HK$15 billion (US$1.9 billion) at a
market peak.
Hong Kong-based firms Gaw Capital and Hengli Investments have appointed two international property agency firms to sell 14 Taikoo Wan Road (Cityplaza 3) and 12 Taikoo Wan Road (Cityplaza 4)
in Eastern district. Gaw, a private equity firm, currently owns a 65
per cent stake in the properties, while real estate investment firm
Hengli holds the remaining 35 per cent.
The city’s office rental market has been in a
slump, imposing credit and liquidity stresses on property owners amid
mounting payments due to elevated interest rates. The vacancy rate for
grade-A offices rose to a record high of 13.6 per cent in June, while
average monthly rents declined by 0.6 per cent month on month to
HK$49.70 per square foot, according to a July report by a property
agency.
The adverse conditions have hit a HK$10.3 billion
loan that Gaw and Hengli took out, backed by the Taikoo office
buildings. With rental income insufficient to cover the interest
payments, the two companies have had to inject equity into the borrowing
entity of the loan, based on their respective stakes, to cover the
shortfall, according to people familiar with the matter. However, Hengli
has not paid its part since late last year amid liquidity issues and
tight rental income, the people said.
The sale will indicate a market price that could
force Hengli to sell its stake and allow Gaw Capital to take more
ownership of the properties, according to one of the people.
The two office towers have a total gross floor
area of 788,095 sq ft. The tender closing date is September 20 and the
buildings will be offered at a discount to the acquisition price,
according to a sales brochure seen by the Post.
The sell-off may be due to tightening credit
conditions imposed by Hong Kong banks. The transaction for the buildings
took place at a market peak, said Mark Leung, UBS’s greater China
property research analyst.
“Now, with rent decreasing by 30 to 40 per cent,
no capitalisation rate expansions occurred, leaving the book value at a
mere 3.0 per cent cap rate,” he said. “If the cap rate increases by 1
per cent, valuation will further decline by 25 per cent.”
Typically, banks stick to a loan-to-value ratio of
60 per cent. But in this case the asset has dropped to 44 per cent of
the original value, considering cap rate expansions and rent declines
over the past few years, Leung said, adding that this situation has led
to a “negative equity” scenario for the project loan.
“With net rental income alone, interest expenses
cannot be covered,” Leung said. “Banks may decide against renewing the
loan when the loan expires. The eventual outcomes are either the banks
seizing the properties or the borrower selling off the assets at
significantly reduced prices.”
A spokesperson for Gaw Capital declined to
comment. Hengli did not respond to emails sent to addresses on its
website, phone calls made to its Fuzhou office, the only listed number
found on its website, nor messages sent via WeChat. LinkedIn messages to
Hengli’s chief investment officer in Hong Kong went unanswered.
Gaw and Hengli acquired the two 22-storey office
towers from Swire Properties in 2019 for HK$15 billion, representing an
average price of around HK$19,350 per square foot. A bank-syndicated
loan of HK$9.78 billion backed that acquisition, according to Bloomberg
data.
Hengli, owned by Chinese tycoon Chen Chang-wei,
has developed residential and commercial projects in mainland China and
managed properties in mainland China, Hong Kong and London, according to
its website. Chen is also a shareholder in Hong Kong-listed Wanda Hotel
Development, according to the firm’s annual report.
(South China Morning Post)
For more information of Office for Lease at Cityplaza please visit: Office for Lease at Cityplaza
For more information of Grade A Office for Lease in Quarry Bay please visit: Grade A Office for Lease in Quarry Bay
中環新商廈全層沽 呎價1.9萬1年跌兩成
中環商廈價格有回調，區內全新甲廈「德林大廈」全層以4,600萬元沽出，呎價不足2萬，料為項目新低呎價，一年內價格亦跌兩成。
德林控股去年3億購5層 獲命名權
消息指，中環威靈頓街98號全新甲廈錄全層買賣，涉及物業18樓全層，面積約2,371平方呎，以4,600萬元成交，呎價約19,401元。以項目樓高23層計，屬該廈高層。大廈剛落成，由於物業位處中環消費核心地段，質素不錯。
物業由資本策略發展，去年初以樓花形式推售，每層面積約2,371平方呎，最初高層定價為5,880萬元，呎價約24,800元。去年首錄成交涉及7樓全層，面積約2,941平方呎，以6,470萬元沽出，呎價約2.2萬元
去年以家族辦公室為主要業務的德林控股 (01709) 投資近3億元購威靈頓街98號最高5層，亦獲得該物業的冠名權，命名為「德林大廈」(DL Tower)，以5層總樓面約1.16萬平方呎計，呎價約2.53萬元。按是次高層樓面成交計，呎價低去年約23%。
資本策略早年併購 去年發售
翻查資料，資本策略早於2014年，以1.05億元購入威靈頓街96號，其後2017年，再斥2.28億元向文輝墨魚丸大王老闆黃俊新及有關人士購入地段94號。2022年發展商部署推出項目，當時呎價約2.16萬元起，並表示因應市況，已下調價格約25%，惟當時反應一般，留待去年再正式推售。
(星島日報)
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