Friday, November 27, 2020
Martin Hennecke

Swire in talks to offload Cityplaza office
Swire Properties (1972) said it is in talks to offload its interests in Cityplaza One, a 21-story office building at Taikoo Shing in Quarry Bay, though no agreement for the disposal has been reached. Private equity firm Gaw Capital Partners has offered to buy the office building for about HK$10 billion, or nearly HK$16,000 per buildable sq ft, the Sing Tao Daily reports. Cityplaza One has a gross floor area of about 629,000 square feet. Shares of Swire Properties fell 0.24 percent to HK$20.55 yesterday. This came two weeks after the shopping mall landlord said it would sell 32 car parking spaces and four motorcycle parking spaces at Taikoo Shing through tender this month - the first time in nearly four decades. Two years ago, the developer sold Cityplaza Three and Cityplaza Four for HK$15 billion to mainland investor Chen Chang Wei's Henglilong Investments. Later, Gaw Capital took up a 49 percent stake in the pair of office towers. The pandemic has dealt a blow to the developer's retail investment properties and hotel business in Hong Kong and mainland China. Underlying net profit in the first half fell 80 percent year-on-year to HK$3.75 billion and net profit fell 89 percent to HK$1.02 billion. In the press briefing in August, chief executive Guy Bradley said: "We're currently thinking that the second half is not going to be much better than the first half in terms of Hong Kong retail, with no real signs of recovery, unfortunately." Swire Pacific (0019, 0087) and Swire Properties chairman Merlin Swire said the group will review dividend payment and remain open-minded about non-core asset sales. Hong Kong's office rental market continues to reel from the impact of Covid-19 and economic downturns. The vacancy rate of Grade A offices in Hong Kong Island East stood at 4.8 percent in the third quarter, up by 20 basis points from 4.6 percent in the second quarter, and Grade A office rents dipped 0.8 percent quarter-on-quarter in the third quarter, according to commercial real estate services company CBRE.

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