CLSA Capital Partners Sells HK Mall for $269M

70

Zing! in Causeway Bay’s prime shopping district sold for HK$2.1 billion

CLSA Capital Partners has sold Zing!, a 27-storey shopping mall in the heart of Hong Kong’s Causeway Bay retail district, for HK$2.1 billion ($268.6 million).

The undisclosed buyer is reported to have paid for Zing! by selling The L. Plaza, a HK$1 billion ($127.9 million) commercial building on Queens Road Central in Sheung Wan, to CLSA Capital Partners while paying an additional HK$1.1 billion ($140.7 million) to complete the deal, according to an account in the Hong Kong Economic Times.

Zing! is a “Ginza-style” shopping mall, so called for its resemblance to the high-rise retail buildings with nightlife offerings in Tokyo’s glitzy shopping district. With floor plates of around 1,750 to 3,400 square feet, the 79,051 square foot building is said to be fully leased out to retail tenants from food and beverage operators to gyms, beauty salons, clubs and karaoke spots.

The building is located at 38 Yiu Wa Street, adjacent to Times Square Hong Kong in the second-priciest shopping district in the world.

Vertical Retail Building Gets a Lift from Surging Rents

John Pattar CLSA

CLSA Capital Partners chief John Pattar and his team had bought the Causeway Bay property in 2014

CLSA Capital Partners, the Hong Kong-based alternative asset manager, purchased the building formerly known as Bigfoot Centre in 2014 for HK$1.4 billion, refurbished it, and re-launched it as Zing! in March 2015. According to the Economic Times report, the company reaped a profit of around HK$500 million ($63.9 million) from the sale, which marks the fourth commercial building transaction in the Causeway Bay area since July.

The private equity arm of Asian investment group CLSA put Zing! on sale via public tender in May and received a strong response from groups looking to take advantage of a hot investment market. CLSA Capital Partners expected the building, which was jointly marketed by Colliers International and Savills, to fetch over HK$2.3 billion, according to a report in The Standard.

“The price for a similar property in Sheung Wan and Admiralty is now more than HK$30,000 per square foot and our price should not be lower than this level,” said Ronald Chiu, an investment director at CLSA Capital Partners at the time.

The retail building has been generating a rental income of over HK$60 million ($7.7 million) per year, according to the newspaper, with rents rising by 70 percent in just three years from HK$35 to more than HK$60 per square foot. The buyer will reportedly enjoy a three percent return.

Mystery Buyer Performs En-Bloc Property Swap

The L. Plaza at 367-375 Queen’s Road Central in Sheung Wan sold for a reported HK$1 billion

The buyer of Zing! is believed to be a low-key local family with a taste for en-bloc building acquisitions. The family, which is reported to have purchased the entirety of The L. Plaza in 2015 for HK$810 million, auctioned the property with an asking price of about HK$1 billion this past April but was unable to sell.

The deal with CLSA Capital Partners enabled the family to get The L. Plaza off its hands while acquiring a more valuable asset in Causeway Bay. Completed in 1984, the 22-storey, 58,269 square foot building is around 90 percent leased out with a rent of HK$28 to HK$30 per square foot and a rental income of nearly HK$2 million ($256,000) per month.

In 2010, the same investor spent nearly HK$1 billion to acquire a commercial building at 88 Gloucester Road, Wan Chai, which is conservatively estimated to have doubled in value since then.

The Causeway Bay investment market has been active lately, with four en-bloc building transactions totalling HK$6.7 billion ($856.9 million) since July, including the Zing! sale. Other deals have included a local investor buying the Cubus Building at 1 Hoi Ping Road from Fubon Insurance for nearly HK$2 billion ($255.9 million), and Lin Zifeng purchasing Lockhart House at 441 Lockhart Road for HK$965 million ($123.4 million).

Source