Abu Dhabi Investment Authority (ADIA) has agreed to buy a 50 percent stake in three Hong Kong hotels from a group led by New World Development Co Ltd (新世界發展) in a HK$18.5 billion (US$2.4 billion) deal, the sovereign wealth fund’s biggest Asian property investment.
Under the deal, New World will sell 50 percent of its interest in three Hong Kong hotels — Grand Hyatt Hong Kong, Renaissance Harbour View and Hyatt Regency Hong Kong hotel — to a joint venture to be formed by New World and ADIA, the Hong Kong company said in a statement yesterday.
New World, which has long planned an initial public offering (IPO) of its hotel properties, has instead teamed up with ADIA to form a 50-50 joint venture to pursue acquisitions in the hospitality industry, said the Hong Kong company, founded by Hong Kong tycoon Cheng Yu-tung (鄭裕彤).
New World will get HK$10.1 billion from the sale, and plans to use the proceeds to fund its Hong Kong property development projects including the marquee New World Centre Development in Tsim Sha Tsui.
The ADIA deal marks the second real estate-related investment by a Middle Eastern fund in Hong Kong in the past six months as sovereign wealth funds hunt for stable returns.
Qatar Holding in October last year paid US$616 million for about one-fifth of Lifestyle International Holdings Ltd (利福國際).
Chow Tai Folk Enterprise Ltd (周大福企業), a private company owned by Hong Kong’s Cheng family, is a minority holder of those hotel assets. It will receive about US$500 million from the deal.
The three hotels had a market value of HK$21.3 billion as of March 1.
Separately, China’s Fosun Group (復星集團) will co-develop a luxury residential tower in New York, underscoring the company’s growing appetite for US property holdings after its One Chase Manhattan Plaza purchase in 2013.
Fosun will develop the 47-story condominium tower on Madison Avenue in midtown Manhattan with New York developer JD Carlisle LLC, China’s largest closely held conglomerate said in an e-mailed statement yesterday.
It will be the first high-end overseas project Fosun will develop from the ground up, it said. The investment amount was not disclosed.
The US market is “vibrant” and Fosun has “many deals” under discussion, even after asset prices went up “a lot,” Fosun chairman Guo Guangchang (郭廣昌) said in an interview at Bloomberg’s headquarters in New York last week.
While real-estate prices have surged since Fosun bought One Chase Manhattan from JPMorgan Chase & Co in 2013 for US$750 million, they still have room to increase, Guo said.
Fosun, which owns Club Mediterranee SA, is scouting for property investments overseas as it seeks to boost returns from its insurance operations. Last year, it purchased office buildings in Tokyo and Sydney, including Citigroup Center in the Japanese capital and 73 Miller Street in North Sydney.
Additional reporting by Bloomberg
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