Swire sells 50% stake in Hong Kong tower to Grosvenor

Swire Properties, the Hong Kong-based real estate developer, has sold a 50 percent position in its PCCW Tower at Taikoo Place in the Island East area of the city, to London-based real estate investment and fund management firm Grosvenor.

In an announcement by Swire, which has more than 17.8 million square feet of commercial space under management in the city, the firm has sold the stake on a property valuation of HK$4.39 billion (€414 million; $566 million).

Starting 2010 with a 20 percent position, the firm’s ownership of the 620,000 square foot property has fluctuated over the past couple of months.

At the end of September it bought back an 80 percent stake in the office from Parsippany-based Pramerica Real Estate Investors in a deal reported to be valued at $HK3.2 billion to own the asset as its entirety. Pramerica said it had earned 'double digit' returns through the divestment in an announcement at the time.

The subsequent investment by Grosvenor brings Swire’s ownership up to 50 percent, a level described by Martin Cubbon, chief executive of Swire Properties, as enough to “safeguard our interest in one of our core assets in Hong Kong.” The firm owns 13 assets in the city which it describes as Grade A quality.

The investment is Grosvenor’s second large outlay in China in the space of a couple of weeks. At the beginning of the month, PERE revealed that Grosvenor had made the first investment of its Grosvenor Vega China Retail Fund, a $600 million China retail fund which has sat on the sidelines of the investment market for more than two years. Grosvenor and its partner Vega Wharlock Properties made a $254 million investment into The North, a 930,000 square foot shopping centre in Shanghai.

Nick Loup, the firm’s chief executive for Asia said of the PCCW deal: “Given the success of Swire Properties’ Island East portfolio to date and their future vision, we are confident of the growth prospects over the long term.”