New York-based investment powerhouse KKR & Co. agreed to pay HK$180 million (US$22.93 million) for a 50% stake in a Hong Kong retail asset owned by property development and investment firm Wang On Group, according to a document filed with the stock exchange last week.
The investment bought the private equity firm ownership in a joint venture with the Wang On companies, which will hold a two-story retail podium at the Lake Silver residential complex in the Ma On Shan area in the New Territories. The newly-formed joint venture will lease the suburban shopping complex to a unit of Wang On Group for another decade, said the Hong Kong-listed Wang On Group in the document.
The Ma On Shan property has a total gross floor area of about 28,200 square feet that are currently tenanted, subject to existing tenancies and licenses expiring in the period between 2019 and 2023, with an aggregate monthly rent of about HK$602,000 (US$76,707), according to the document.
Wang On Group said KKR would pay HK$60.4 million (US$7.69 million) in cash, and subscribe to as much as HK$122 million (US$15.54 million) in shares in the joint venture.
The deal came after Wang On Group and its development affiliate Wang On Properties acquired the shopping center in January 2019. The Wang On companies would sell the retail property to the joint venture at a valuation of HK$653 million (US$83.20 million).
The cooperation presents "a good opportunity" to leverage on the Wang On’s "knowledge and expertise in property investment and management and to partner with a renowned institution to expand its business," said the company.
KKR, founded in 1976, operates as a private equity and real estate investment company that specializes in direct and fund of fund investments. The transaction comes less than one month after KKR was said to be raising US$1.5 billion for its first Asia-focused real estate fund as the company seeks to deepen its real estate portfolio in the region, according to people with knowledge of the matter cited by a Reuters report.
The company launched a China-focused hospital investment and management platform, "SinoCare Group," in late September 2018. With a focus on the third- and fourth-tier cities in China, the platform aims to provide high-quality health care services to patients in the country through the acquisition, build-out and consolidation of hospitals.