Gaw Consortium Buys $2.9 Billion of Link REIT Malls in H.K.

Updated on
  • Link REIT says sale will net disposal gain of HK$7.4 billion
  • Goldman is said to be part of the consortium buying assets

A shopper rides an escalator at a Link Real Estate Investment Trust mall in Hong Kong.

Photographer: Brent Lewin/Bloomberg

A consortium led by Gaw Capital Partners is buying a portfolio of shopping malls in Hong Kong for HK$23 billion ($2.9 billion) from Link Real Estate Investment Trust after the assets attracted interest from private equity funds, sovereign wealth funds and local investors.

Private equity firm Gaw is the largest investor with about a 52 percent stake, with Goldman Sachs Group Inc. and China Great Wall Asset Management Co. joining as minority investors, said people with knowledge of the deal. The sale, at a 52 percent premium to the appraised value of the 17 properties, yielded a net disposal gain of HK$7.4 billion, Link REIT said in a statement late Tuesday.

“As sizeable portfolios of such high-quality retail assets are hard to come by in Asia, the sale attracted overwhelming interest from international investors,” George Hongchoy, chief executive officer of Link Asset Management Ltd., said in a statement. He cited the range of potential buyers and said the price was a vote of confidence in Hong Kong’s economy and retail sector.

The sale shows fierce demand in Hong Kong’s property market after the city set a world record for a commercial building transaction, with a consortium led by a state-owned Chinese energy company agreeing to pay $5.2 billion to billionaire Li Ka-shing’s CK Asset Holdings Ltd. for most of office building.

Link REIT shares jumped as much as 3.3 percent to a record high. Goldman Sachs and Gaw declined to comment. Representatives of Great Wall didn’t immediately return a call and an email seeking comment.

Strategic Review

Asia’s largest REIT is disposing of non-core assets after a strategic review announced in July. Once the deal is done, Link will have about 90 percent of its assets in Hong Kong and 10 percent in mainland China, with a total portfolio value of about HK$175 billion, the company said. The sale proceeds will fund investments in Hong Kong and first-tier mainland cities, working capital, and “where appropriate” unit buy-backs, it said.

Link REIT only shortlisted private equity firms and institutional investors likely to hold properties long term, according to Antonio Wu, deputy managing director of capital markets and investment services for Asia at Colliers International Group Inc.

“In some previous transactions, some short-term investors tried to put the properties back on the market and resold car-parks prompting negative response from the market. This time they want to do it properly,” he said.

Before the latest deal, Link REIT had sold 28 malls worth HK$12 billion since 2014. DTZ Cushman & Wakefield is a real estate advisor on the latest deal, and HSBC Holdings Plc and UBS Group AG are financial advisors.

Link REIT had 155 properties across Hong Kong with about 10 million square feet of retail space and around 69,000 car park spaces, which accounted for 91.2 percent of the group’s total portfolio value, according to its interim report for the six months ended September.

The deal, which includes malls and more than 8,000 parking spaces, is slated for completion on Feb. 28.

— With assistance by Dingmin Zhang

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