(Bloomberg) -- The deadline has lapsed to find buyers for stakes in two Hong Kong office buildings majority owned by real estate investment firm Gaw Capital Partners, according to people familiar with the matter.
The tender for Cityplaza Three and Cityplaza Four, located in eastern Tai Koo area, closed on Sept. 20, according to a sales flyer seen by Bloomberg News. The sales process was deemed unsuccessful as there were no bids for the properties, including from Gaw Capital which had earlier planned to put in a bid, said the people, asking not to be identified speaking about private matters.
Gaw Capital, which currently holds 65% of the properties, had sought to take full ownership of the office buildings from minority stake partner Hengli Investments Holding (Group) Ltd. via public tender, Bloomberg reported in June. One of the people said that the tender process started late July.
Gaw Capital appointed real estate agencies Savills Plc and Jones Lang LaSalle Inc. for the tender process, according to sales materials and the people.
A Savills spokesperson said there were no acceptable bids as of now while a spokesperson for Gaw Capital declined to comment. Hengli Investments and Jones Lang LaSalle didn’t immediately respond when contacted.
Hong Kong’s commercial property slump — triggered by an increase in new office supply, international corporates’ cost-cutting efforts and slower-than-expected return of mainland Chinese companies — has weighed on the sector. Office vacancy rates rose to a record high of more than 16% in the second quarter, with rents falling 35% since the peak in 2019, according to Colliers International Group Inc.
Gaw Capital intended to acquire Hengli’s stake at a price equivalent to the value of debt that the latter owes, said one of the people. Both parties had raised a HK$10.3 billion ($1.3 billion) syndicated loan to fund the acquisition of the properties. The facility matures in early 2025.
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