The Real Deal New York

Chinese investor backs out of $5.2B deal for Hong Kong skyscraper

Tower will be majority-owned by Hong Kong investors
February 27, 2018 10:30AM

The Center in Hong Kong and Li Ka-shing

Beijing-based China Energy Reserve and Chemicals Group Properties is backing out of a $5.2 billion deal for a Hong Kong skyscraper.

It’s unclear why the company reneged on owning 55 percent of C.H.M.T. Peaceful Development, the investment vehicle used to buy a stake in the Center, Hong Kong’s fifth tallest skyscraper, Reuters reported. But the decision comes as China cracks down on outgoing investments in real estate and Chinese companies struggle to raise capital outside the country.

Most of China Energy Reserve’s 55 percent stake will be scooped up by Hong Kong-based investors. Chinese developer Shimao Property’s Chairman Hui Wing Mau is expected to take 20 percent of China Energy Reserve’s stake.

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Billionaire Li Ka-shing announced in November that he was selling the 73-story office tower. At $5.2 billion, it was the world’s largest single property sale. Meanwhile, Hong Kong’s Champion REIT recently took the Langham Place Office Tower in Mongkok off the market because it struggled to find a buyer. It was listed for $3.1 billion.

A recent JLL study found that Hong Kong’s prime office market is 66 percent more expensive than Midtown Manhattan, with the average price per square foot checking in at $323. [Reuters] — Kathryn Brenzel