ADIA in HK$18.5bn Hong Kong hotels deal

The Middle Eastern sovereign wealth fund has acquired a 50 percent stake in three prime hotels in Hong Kong via a joint venture agreement with New World Development.  

The Abu Dhabi Investment Authority (ADIA), the Middle Eastern sovereign wealth fund, has agreed to acquire a 50 percent stake in three Hong Kong hotels in a deal valued at HK$18.5 billion (€2.1 billion; $2.4 billion), reported to be one of its largest property deals in Asia to date.

The Hong Kong-based real estate firm New World Development Co Ltd has entered into a joint venture partnership with the state wealth fund to sell half of its stake in three hotels in the city – Grand Hyatt, Renaissance Harbour View and Hyatt Regency TST – to HIP Company, ADIA’s wholly-owned subsidiary. ADIA did not immediately respond to requests for a comment.

“We are very pleased with this new joint venture and are looking forward to the beginning of what we hope is a long term relationship and opportunities to do more together with the new partner,” Dr. Adrian Cheng, executive vice-chairman of New World Development said in a statement.

He added further: “The transaction offers the best of both worlds for NWD shareholders. We continue to retain a long term interest in these prime hotel assets in Hong Kong whilst at the same time recycling capital to pursue other value enhancing investments…”
A report in Reuters has estimated the combined market value of the three hotels to be HK$21.3 billion as of March 1, 2015.

According to the statement by New World, the conglomerate founded by Hong Kong tycoon Cheng Yu-tung, will get HK$10.1 billion from the sale of its part stake and will use the proceeds to fund other property development projects in the city.

This is the second real estate deal by a Middle Eastern sovereign wealth fund in Hong Kong in less than one year. In October 2014, Qatar Holding acquired one fifth of Lifestyle International Holdings, a department operator in Hong Kong and China, for $616 million.

For ADIA, this is the second real estate deal in this month. Earlier in April, it sold off its stake in Germany’s largest private home owner Deutsche Annington for €750 million.