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Swire Properties Holder Offers Up to $650 Million Stake

Swire Properties Falls on Shareholder Sale
A man walks through Swire Properties Ltd.'s Taikoo Place in Hong Kong. The sale comes less than two months after the landlord said in August that John Swire would sell 234 million shares at HK$21.53 each, cutting its holding to 3.71 percent from 7.71 percent. Photographer: Jerome Favre/Bloomberg

Swire Properties Ltd. fell by the most in almost two months in Hong Kong trading after controlling shareholder John Swire & Sons Ltd. said it is selling its entire directly held stake in the landlord of Societe Generale SA and Time Warner Inc.

The shares fell 2.9 percent, the most since Aug. 14, to HK$23.25 at the close in Hong Kong.

John Swire & Sons is offering 217 million shares at HK$22.51 each, or 6 percent less than yesterday’s closing price of HK$23.95, according to a statement to the Hong Kong Exchange today. John Swire & Sons will cease to be a direct shareholder and will retain control of the developer through Hong Kong-listed Swire Pacific Ltd.

“The disposal will help boost the liquidity of Swire Properties,” Citigroup Inc.’s Hong Kong-based analysts, led by Anil Daswani, wrote in a note today.

The sale comes less than two months after the landlord said in August that John Swire & Sons would sell 234 million shares at HK$21.53 each, cutting its holding to 3.71 percent from 7.71 percent.

Market response to the share sale in August “has been very positive and there’s strong investor interest in Swire Properties,” Cindy Cheung, a spokeswoman for John Swire & Sons, said in an e-mail response to Bloomberg News queries. She declined to comment on what the company would do with the proceeds.

Before today’s announcement, Swire Properties gained 39 percent since its trading debut on Jan. 18, compared with a 6.1 percent increase in the benchmark Hang Seng Index over the period.

Soaking Up Demand

The share sale “may soak up some near-term investor demand for Swire Properties’ shares,” Bank of America Corp.’s Merrill Lynch & Co. analysts, led by Karl Choi, wrote in a note today. The company’s “fundamentals remain solid as decentralized office demand is still healthy.”

Swire Properties said Aug. 10 that profit excluding real estate revaluation increased 3.8 percent to HK$2.44 billion ($315 million) because of growth in rental income from its office projects and shopping malls in the city and mainland China.

The developer is the biggest landlord in Hong Kong’s Island East district and also has projects in four other Chinese cities, including Beijing and Shanghai.

Swire Properties owns about 10.5 million square feet of prime office space and 2.4 million square feet of retail space in Hong Kong, including the Pacific Place and Island East commercial complexes. The company is expecting to complete two new office buildings on Hong Kong Island in the fourth quarter.

Closely held John Swire & Sons controls Swire Pacific, which is Swire Properties’ largest shareholder, with an 82 percent stake, according to data compiled by Bloomberg.

Morgan Stanley, BOCI International China Ltd., HSBC Holdings Plc and JPMorgan Chase & Co. are managing the sale, according to the statement.

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