Li Ka Shing sells HK office tower for record $7b

The sale of The Center in Hong Kong will bring a gain of about HK$14.5 billion (S$2.5 billion) for CK Asset Holdings, which is owned by tycoon Li Ka Shing.
The sale of The Center in Hong Kong will bring a gain of about HK$14.5 billion (S$2.5 billion) for CK Asset Holdings, which is owned by tycoon Li Ka Shing.PHOTO: REUTERS

HONG KONG • Tycoon Li Ka Shing's CK Asset Holdings has agreed to sell its stake in The Center for HK$40.2 billion (S$7 billion), setting a record for a Hong Kong office tower and showing that the city's commercial property market remains red hot.

CK Asset's gain will be about HK$14.5 billion, the company told Hong Kong's stock exchange on Wednesday. State-owned China Energy Reserve and Chemicals Group owns 55 per cent of the purchaser, with Hong Kong individuals accounting for the rest, local media said.

The deal bodes well for the potential sale of the Langham Place Office Tower in Mongkok by Champion Reit, Morgan Stanley said.

A mainland Chinese company, LVGEM (China) Real Estate Investment Co, last month announced the HK$9 billion purchase of a building from Wheelock & Co. Earlier this year, Henderson Land Development Co paid HK$23.3 billion for the first commercial land sold by the government in the Central district in more than 20 years.

"Demand from mainlanders remains strong and capital controls may not be as strict as many investors think," Mr Raymond Cheng, director of Hong Kong and China property research at CIMB Securities, wrote in a note. "We expect this transaction to set a benchmark for future office transactions, especially in Central."

CK Asset shares rose as much as 4.6 per cent.

The sale proceeds may go into share buybacks, special dividends or investments in high-yielding non-property assets, Mr Cheng said.

CK Asset, which changed its name from CK Property, is diversifying away from its main real-estate business.

CK Asset and affiliate CK Infrastructure Holdings earlier this year agreed to buy a German maker of smart meters for about €4.5 billion (S$7 billion), building on the company's expansion in infrastructure and energy.

CK Asset's properties, which include the Cheung Kong Center and Hutchison House, spanned about 17 million square feet as of June, with more than 80 per cent located in Hong Kong, said the company. It owned 75 per cent of the floor space in The Center, according to Morgan Stanley.

The 73-story tower in the Central business district is the city's fifth-tallest, according to the Skyscraper Center.

The purchaser of The Center, CHMT Peaceful Development Asia Property, is a British Virgin Islands special purpose vehicle set up for the acquisition.

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A version of this article appeared in the print edition of The Straits Times on November 03, 2017, with the headline 'Li Ka Shing sells HK office tower for record $7b'. Print Edition | Subscribe