Viewpoint real estate networkTwo years ago, Henderson Park, a British real estate investment company, bought office buildings in the City of London for 120 million pounds (1.055 billion yuan)AtheneNick Webb, its founding partner at Place, said it was an extraordinary building that had begun to attract interest from tenants and had great potential.
But it was reported in July that the building had been placed on the trading shelf again. As 2020 draws to a close, a potential buyer may emerge as a small and medium-sized developer in Hong Kong.
Hong Kong Wing Tai Holdings (Wing Tai), controlled by Zheng Yixiong's family, will buy the Athene Place (Athena Square) for 262 million pounds (about 2.28 billion yuan), with assets of 1.23 billion yuan if the deal is completed, media reported on December 2.
The building is also known as the "London Deloitte Building" because Deloitte, one of the big four accounting firms, is the only tenant of Athene Place.
On the same day, as the real estate listing platform of Hong Kong Wing Tai Holdings Group--Yongtai real estateLost in the bidding for the Kai Tak site in Hong Kong.
The site is homestead No. 1 in area 4E of Kai Tak East, Kowloon East, which was eventually won by China Sea for HK $4.2728 billion.
The Kai Tak site has previously received 10 bids, setting a new high in the number of residential tenders in the runway area of the old airport, so it has attracted much attention from the market.
In recent years, Wing Tai has slowed the pace of new land projects in Hong Kong, focusing on London thousands of miles away.
According to the opinion Real Estate New Media, if the acquisition of Deloitte Building goes well, it will be the seventh London asset completed by Yongtai Real Estate, which already has the layout of six Grade An office and store projects in the West end and downtown London.
Be bullish on London
London has experienced two closures this year because of the epidemic.
The blockade has had a great impact on real estate investment, according toCBREIn the second quarter of this year, investment in London was the third lowest in 20 years, and investors were mostly on the sidelines to avoid risk.
With the introduction of COVID-19 vaccine, Britain officially ended the second closure on December 2, and ushered in varying degrees of unsealing. Capital market participants expressed optimism about the move and believed that the investment dormancy caused by the epidemic would be broken and the London real estate investment market would begin to thaw.
The head of Savills' global cross-border investment department agreed that London's capital markets had been opened up and believed that this was consistent with the relaxation of the blockade on the epidemic.
After the epidemic this year, the development of commercial real estate is very difficult. Compared with the transaction price of 120 million pounds two years ago, the price of the Deloitte building bought by Yongtai Real Estate for 260 million has increased by 160%. Foreign media said that "this seems unlikely, but investors are taking advantage of the opportunity to make a profit."
Data show that the Deloitte Building, located in London 66 Shoe Lane, is located in the Old City near the West end, with a total area of 157000 square feet (about 14100 square meters). According to the purchase price, the price of the building is as high as 162000 yuan per square meter.
Industry insiders said that the building is close to the city of London and the West end, so the demand and number of tenants is large, facing theGoldman Sachs GroupThe front door of the new European headquarters attracts people in the professional services and TMT industries. In central London, it has a low vacancy rate of less than 4 per cent, making it a good asset.
In addition, the Deloitte building has a total of 10 floors, including the basement, ground floor and ninth floor. Before the intervention of the relevant Yongtai Group, Henderson Park acquired the asset from Commerzbank, but the transaction price was lower, byBlackstone Group IncPriority debt financing provided by the real estate debt strategy.
After the acquisition of the asset by Henderson Park, the Deloitte building was completely renovated and repositioned. Last year, Henderson Park leased about 75000 square feet of the asset to Deloitte for a 15-year lease, while CBRE and BH2 occupied about 75000 square feet of office space on two to five floors.
It is worth noting that the Deloitte building is not a permanent property right, it is currently a lease property right, with a remaining life of about 132 years. The annual rent of the building is expected to be 10.8 million pounds (about 94.9882 million yuan), with an initial rental return of about 4.2 per cent.
As a matter of fact, the story of Hong Kong consortia keen to invest in London is no longer new, including Li Ka-shing, Lau Luen-hung, Zhang Songqiao, Lo Xu Rui, Lin Jianyue, Kwok Ping-lian, Li Wanda, Chen Zhenbin, Hong Kong shop king Lai Yongtao, Lee Siu-kee family members Cheng Kai-man, Cheng Yi-hung family, and so on, have bought a lot of assets in London.
Unexpectedly, the vacancy rates of most offices and shops in the mainland and Hong Kong affected by the epidemic this year reached record highs, but in terms of the commercial assets of Wing Tai Real Estate in London, it seems that it has not been greatly affected by the epidemic.
According to the China News, the rental rates of six London properties of Wing Tai Properties remain high, and the average occupancy rate of three wholly-owned properties is 99%. At present, the net indoor area of Wing Tai Properties' commercial assets in London amounts to 649900 square feet.
Of the six London assets, Wing Tai has four office projects in the West End. You know, the West end was once seen as the most expensive office market in the world since the financial crisis, while two other offices in the City of London are worth a lot of money.
The biggest acquisition was in November 2018, when Wing Tai Properties teamed up with Hong Kong Wantai Garment to buy 30 Gresham Street of an ultra-luxury landmark office building in the City of London for 460 million pounds (4.6 billion Hong Kong dollars, 4.06 billion yuan).
As of the first half of 2020, Yongtai property achieved income of 1.957 billion Hong Kong dollars, of which 97.22% came from property sales and leases in Hong Kong, accounting for 1.902 billion Hong Kong dollars, while income from London was only 14.5 million yuan. For the whole of last year, Wing Tai's rental income in London was HK $28.5 million, up 7.95 per cent from a year earlier.
At a time when the number of projects laid out in London has far exceeded that of commercial assets in Hong Kong, outside the London market, Wing Tai Real Estate's current performance, London contributes very little to the group's income.
The reason is that Yongtai real estate has a low stake in two large office assets in the city of London, no more than 50 per cent, and may not have been incorporated into the financial statements of listed companies.
On the other hand, the office assets in the West end of London are smaller and can contribute less rental income.
Make clothes and start
Originally from Shantou, Guangdong, Zheng Yixiong founded Hong Kong Yongtai Garment Factory in 1955 and, like most Hong Kong-funded enterprises, entered the real estate industry in 1978.
According to the opinion Real Estate New Media, the former USI Group, as the only listing platform for Yongtai in Hong Kong, was listed in 1991 and is a real estate developer and hotelier in Hong Kong and Singapore.
With the older generation of founders fading out, the man in charge of Yongtai Real Estate has now been handed over to Zheng Yixiong's three sons.
In 1985, Zheng Weijian, who returned from his doctoral degree in the United States, began to run the family business. at the age of 71, he served as chairman of Wing Tai Real Estate.Newly established groupAnd an independent non-executive of the Hongkong and Shanghai Banking Corporation. In addition, the Chief Executive Officer of Wing Tai Real Estate is Cheng Wai-sun, the younger brother of Cheng Wai-kin.
Currently, Wing Tai Properties owns two property brands, namely Wing Tai Asia and Lanson Place, and its properties include W Square, INC. in Wan Chai and Lanson Place Hong Kong in Causeway Bay.
It is worth mentioning that in addition to being held by Wing Tai Holdings,Sun Hung KaiThe group also holds a 13.8% stake. In 2010, USI changed its name to Wing Tai Real Estate.
Subsequently, between 2012 and 2016, Wing Tai Properties successively bid for four sites in Sha Tin and Tuen Mun in Hong Kong at a total price of $5.639 billion, with a total floor area of 796200 square feet. In 2017, Wing Tai Real Estate won project C of the URA's Peel Street and Graham Street site for HK $11.62 billion through a 65% shareholding consortium.
Market news shows that the Peel Street / Graham Street development project has a total of three sites A, B and C, which is the most popular old renovation project in the history of Hong Kong in 2017. Previously, the parcel A project was made up ofSino Land Co. Ltd.The bid for site B is won by Changshi, and the consortium for project C at Peel Street and Graham Street site is highly competitive, including Changshi,Sun Hung Kai Properties、New World、Kowloon Wharf, Kerry and other developers.
After winning the C project on Peel Street and Graham Street site, Wing Tai Real Estate began to recover funds through the sale of assets. The Warehouse at 1-9 Sha Tsui Road, Tsuen Wan will be sold at HK $2.163 billion, and then the commercial assets of Square, INC. at Hennessy Road, Wan Chai will be sold at HK $2.8488 billion.
At present, Project C at Peel Street and Graham Street site will be developed into a comprehensive commercial project covering a Grade An office building, a hotel, retail space and a public open green belt, providing a total floor area of up to 433500 square feet. Wing Tai Real Estate is responsible for the construction and leasing of the project, and the foundation work of the project is still in progress.
According to the latest valuation report, as at the end of 2019, the investment property portfolio of Wing Tai Properties in Hong Kong, China and the United Kingdom was stated at fair value of HK $20.4273 billion in the consolidated income statement, resulting in a revaluation loss of HK $126.4 million. In the first half of 2020, the investment property value of Wing Tai Properties further shrank to HK $19.916 billion.
In addition, in the first half of 2020, Wing Tai Properties recorded an income of HK $1.957 billion, an increase of 361.56% over the same period last year (the income in the first half of 2019 was only HK $424 million). It said that the increase in income was mainly due to the income recognized by the The Carmel low-density residential project in Tai Lam, Tuen Mun during the period.
Unfortunately, Wing Tai Properties also faced the problem of increasing income without increasing profits, recording a consolidated loss of HK $458 million in the first half of the year, a decrease of HK $703 million compared with a profit of HK $245 million for the same period, due to a loss of HK $773 million on the fair value of the joint venture's investment properties and financial instruments, compared with HK $27 million in the same period in 2019, offset by a confirmed profit of HK $85 million by The Carmel.