Gaw Capital seeks to buy HK building stakes from partner

The Hong Kong-based fund manager with a special focus on real estate plans to acquire the entire stake in Cityplaza Three and Cityplaza Four via public tender. — Bloomberg

HONG KONG: Hong Kong-based private equity firm Gaw Capital Partners is seeking to take full ownership of two Hong Kong office buildings from partner Hengli Investments Holding (Group) Ltd, according to people familiar with the matter.

The Hong Kong-based fund manager with a special focus on real estate plans to acquire the entire stake in Cityplaza Three and Cityplaza Four via public tender, said the people, asking not to be identified discussing private matters.

Gaw Capital currently owns an around 65% stake in the properties, both located in Hong Kong’s eastern Tai Koo area, while Hengli controls the remaining 35%. A public tender process hasn’t started and there is no guarantee of the outcome if it does.

Hong Kong’s commercial property slump is causing unprecedented credit stress in a market with around US$14bil of real estate loans coming due for the remainder of 2024, Bloomberg-compiled data show.

Funds are increasingly trying to sell once-prized office towers at significant discounts to avoid mounting interest payments on debt, but such sales have been no easy feat.

A HK$10.3bil (US$1.3bil) loan backing the properties in question for Gaw Capital and Hengli was structured in a way that rental income generated from the two office towers was supposed to be used to service the bi-annual interest, one of the people said. — Bloomberg