Evergrande's US$1.7b Hong Kong headquarters sale flops as buyer withdraws: sources

Chinese state-owned Yuexiu Property has pulled out of a proposed US$1.7 billion deal to buy China Evergrande Group's Hong Kong headquarters building over worries about the developer's dire financial situation, two sources said.

The collapse of the talks for the landmark building's sale is another setback for cash-strapped Evergrande which has been scrambling to divest some assets to repay creditors knocking on its doors. With more than US$300 billion in liabilities, it has already missed three rounds of interest payments on its international bonds.

Yuexiu, based in the southern city of Guangzhou, was close to sealing a deal in August to acquire the 26-storey China Evergrande Centre in Hong Kong's Wan Chai district that serves as Evergrande's local headquarters, said the sources.

The deal, however, faltered after Yuexiu's board opposed the move over worries that Evergrande's unresolved indebtedness would create potential complications in completing the transaction smoothly, they said.

Once China's top-selling developer, Shenzhen-based Evergrande has in recent months sought to raise funds by offloading assets - from properties to stakes in subsidiaries - both in mainland China and in Hong Kong.

Evergrande and Yuexiu did not respond to requests for comment.

The people declined to be identified due to confidentiality constraints.

Evergrande bought the harbourside building, which is located in Hong Kong's commercial and night life district and covers an area of 345,000 square feet, from local peer Chinese Estates Holdings for HK$12.5 billion (US$1.61 billion) in 2015.

That deal set a record for a single transaction of a commercial building in the Asian financial hub with the highest price per square foot at the time. It also made the property Evergrande's single largest asset in the city.

Evergrande has financed the bulk of the transaction with securitised products worth more than HK$10 billion, said one of the sources, which means it would only recoup limited cash from the sale of the building.

EVERGRANDE PROSPECTS

The board of Yuexiu, which focuses on property developments in China's Greater Bay Area and has a presence in Hong Kong, became concerned about the deal's certainty at a time when Evergrande's future is uncertain, said one of the sources.

Yuexiu also received guidance from the municipal government of the southern city of Guangzhou to put the purchase on hold at the end of August, said the person.

A separate source familiar with the matter said the deal was halted in late August because the Guangzhou government wanted to review the overall financial situation of Evergrande first to better understand the use of proceeds from its asset disposals.

The Guangzhou government did not respond to a request for comment.

Separately, Evergrande is in final talks to sell a 51% stake in its property management arm Evergrande Property Services to domestic peer Hopson Development, in a deal that could fetch about HK$20 billion, said two of the sources.

One of them said both parties are finalising details including financing for the buyer.

When asked about the deal, Hopson said any comments will have to wait till an announcement is made.

The Hopson deal would be Evergrande's largest asset sale yet if it goes ahead. The struggling developer's other business interests include a bottling water company and an electric vehicle maker.

It is also close to selling its Guangzhou FC Soccer stadium and surrounding residential projects to Guangzhou City Construction Investment Group, Reuters reported last month. -- Reuters

(The Standard)

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Centralcon’s Sha Tin housing project launch gets off to a slow start as buyers hold out for better options amid robust supply

Centralcon Properties managed to sell 271 flats, or 72 per cent of the first 374 units earmarked for sale at The Arles in Sha Tin on Saturday, sources said

The first batch of The Arles flats averaged HK$20,265 (US$2,605) per square foot, 5 per cent cheaper than Pavilia Farm at the Tai Wai station nearby

A weekend property sale got off to a slow start in Hong Kong, as homebuyers balked at flats offered by lesser known developers in a market where thousands of new flats are waiting to launch this year.

Centralcon Properties, a local developer, managed to sell 271 flats, or 72 per cent of the first 374 units earmarked for sale at The Arles in Sha Tin on Saturday, according to sources. Another 162 flats at the same project are scheduled for sale on Sunday.

The Arles, located near the Fo Tan subway station in eastern New Territories, is a crucial test of whether Hong Kong’s residential property bull run can maintain its momentum in October. It’s also the first sales launch in the area since Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor unveiled her plan to build a Northern Metropolis close to the southern border of mainland China, where 2.5 million people may live within 20 years.

Expectations about the Northern Metropolis have given homebuyers more options and stronger bargaining power, giving them the ability to wait for better offers, property agent said.

The first batch of flats at The Arles were priced at an average of HK$20,265 (US$2,605) per square foot, about 5 per cent cheaper than New World Development’s Pavilia Farm project at the Tai Wai station nearby.

When fully completed in March 2023, The Arles will comprise 1,335 apartments of between 228 and 947 square feet, selling for between HK$6.17 million and up to HK$23.5 million after factoring in a 15-per cent discount, as is the industry’s norm.

Thousands of new homes are scheduled for launch in Hong Kong in the remainder of the financial year ending in March 2022, with real estate agency predicting an annual increase of 14 per cent to 36,919 units.

CK Asset Holdings and Henderson Land Development, two of Hong Kong’s largest and best-known property developers, are poised to release 2,000 new homes between then in the New Territories.

CK Asset is about to kick off the marketing push for the #Lyos housing development comprising 341 units in Hung Shui Kui, which is expected to be served by a new rail link connecting Shenzhen’s burgeoning Qianhai economic zone. Henderson has a yet-to-be-named housing project in Fanling North close to the proposed On Lok Tsuen station that is awaiting presale approval.

Hong Kong’s property market has quickly recovered from the Covid-19 pandemic, as the city’s economy rebounded with help from the government’s multibillion-dollar e-voucher scheme. The city’s jobless rate fell to 4.7 per cent for the three months ending in August, the lowest level since the outbreak of Covid-19, according to the government data.

The LP10 project jointly developed by Nan Fung Group and MTR had 80 per cent of its flats sold out on the October 1 National Day.

Some buyers also bring forward home purchases before the possible increase in borrowing costs, with the monetary policy in Hong Kong in lockstep with that of the US Federal Reserve.

The city’s lived-in home prices stayed near a historical high in August after rising to a record in July. Sales of newly completed homes totalled 1,700 units in September, the best monthly performance since May, according to property agency. The real-estate agency expects sales of new homes to reach up to 2,500 this month.

(South China Morning Post)

土瓜灣舊樓強拍底價9.62億

近年恒基併購紅磡及土瓜灣一帶舊樓群，陸續踏入收成期；最新的土瓜灣落山道、美華街及下鄉道舊樓群、獲土地審裁處批出強拍令，底價9.62億，對比2019年4月提出申請時市場估值約7.0659億，高出約37.4%。

恒基持約96%業權

據土地審裁處文件顯示，是次獲批強拍令的項目位於土瓜灣落山道58至70號、美華街1至9號及下鄉道18至20號；上述財團由申請強拍時持有約84.292%業權，最新增持至96.239%業權，目前僅餘下4個單位未成功收購。

根據判詞指出，申請人曾委託結構工程師對該舊樓進行結構評估，認為該建築物已達其設計壽命，加上維修情況欠佳，部分設施未能符合現代安全標準和法定要求，而且維修成本與重建成本不成比例，重建發展是合適做法。

底價較07年高37%

現址樓齡約61年的商住物業，地下為商鋪，樓上則為住宅樓層，地盤面積約10196方呎，現為「住宅 (甲類)」用途，如重建成商住發展，預計可建總樓面約91764方呎。資料顯示，恒基已就土瓜灣道68A至70C號申請強拍，而據恒基年報顯示，計畫將上述地盤土瓜灣道，連同是次獲批強拍令的項目合併發展，總地盤面積增至4.2萬方呎，料重建後自佔商住總樓面約37.4355萬方呎。

(星島日報)