Pramerica sells HK$3.2bn tower stake to Swire

Pramerica Real Estate Investors announced today it had sold its 80 percent stake in Hong Kong skyscraper PCCW Tower. The firm was thought to have been seeking an exit since 2008 but has now managed to garner “double digit” returns through a reported HK$3.2 billion sale to Swire Properties.

Parsippany-based real estate investment management firm, Pramerica Real Estate Investors, has sold its majority stake in the PCCW Tower in Hong Kong, an office it purchased in November 2004 for HK$2.8 billion (€265 million; $361 million).

The firm announced the sale of its 80 percent stake in the 620,000 square foot skyscraper today but declined to divulge the buyer or the sale price. The buyer was subsequently reported by the Apple Daily as being Swire Properties, the owner of the remaining 20 percent and the sales price was reported as HK$3.2 billion.

The sale was completed on behalf of institutional investors in a fund advised by its Munich-based arm, Pramerica Real Estate International as part of its core-plus Asia investment strategy.

The asset was developed in 1994 by Swire on behalf of Pacific Century Premium Developments, the real estate arm of Hong Kong telecommunications business PCCW.

Swire retained a 20 percent stake in the asset which was reported by the South China Morning Post to have represented a stumbling block for investors when PREI first marketed its stake in the building for sale in 2008.

According to the report, investors were put off as a buyer would not have had complete autonomy over the asset. It added that as lending conditions worsened on the back of the global economic downturn, the addition of lacking investor demand resulted in the asset being taken off the market. However, with improving market conditions, Swire is reported to have regarded now as the oportune time to take full ownership of the asset.

PREI portfolio manager Martin Sloss said in today’s announcement the sale earned “double-digit” returns from the sale: “Given the highly volatile nature of the real estate market in Hong Kong, and the significant size of this investment, this was the right time to take advantage of the return of investor and banker confidence in the Asian market, which has recovered sine the financial turmoil began.”

Sloss said: “Renewed investor confidence has been fuelled, in part by robust sales in Hong Kong, which rose by nearly 20 percent year-on-year to May 2010, underlining the strength of the overall economy in that area.”