Prosperity REIT abandons deal with Phoenix

The ARA Asset Management-managed REIT will not be proceeding with the acquisition of the Kwun Tong View property owned by Phoenix Property Investors.

The Prosperity Real Estate Investment Trust, the listed Hong Kong trust managed by ARA Asset Management, has decided not to proceed with the HK$1.875 billion ($240 million; €220 million) acquisition of the Kwun Tong View property owned by Phoenix Property Investors.

In a Hong Kong Stock Exchange filing the Prosperity REIT said the unitholders did not pass the resolution in the extraordinary general meeting (EGM) held on Wednesday. A 61.33 percent majority of unitholders did not approve the acquisition in the polling process while the remaining 38.67 percent were in favor.

The reasons for the deal not materializing were not disclosed. According to two media reports Cheung Kong Property Holdings, a major shareholder that owns around 19 percent of the units in the REIT, was among those who rejected the deal.

A source familiar with the deal who spoke to PERE said the outcome was “very unusual.”

“Normally the first thing one would do before agreeing for a deal is to speak to the mothership. It is really unusual that the mothership has chosen to go against the deal,” he said.

In early September PERE had reported on the sale of the property, which, subject to certain closing conditions including ARA unitholders’ approval, was set to officially close on October 26, 2016.

Kwun Tong View is a 25-story office property in the Kowloon business district of Hong Kong. Phoenix Property Investors had acquired the asset in November 2014 using capital from its fifth opportunity fund, Phoenix Asia Real Estate Investments V that closed on $750 million.