Weave Living Acquires Third Hotel In Hong Kong for HK$900m

Main Photo: The Grand City Hong Kong

Date: May 2022

Name: Weave Living

Location: Queen’s Road West, Sai Ying Pun, Western district, Hong Kong Island

Number of Keys: 214

Seller: Magnificent Hotel Investments, a property firm controlled by William Cheng, the son-in-law of Henderson Land Development founder Lee Shau Ke.

Buyer: Weave Living, headed up by founder Sachin Doshi, through a joint venture with global investor Angelo Gordon

Weave Living, through a joint venture with global investor Angelo Gordon, has agreed to purchase a hotel in Hong Kong Island’s Western district for HK$900 million (SIN$115 million) from a property firm controlled by William Cheng, the son-in-law of Henderson Land Development founder Lee Shau Ke.

Cheng’s Magnificent Hotel Investments also revealed Wednesday that it is working on a separate HK$1.42 billion deal to buy the 435-key Bay Bridge Lifestyle Retreat hotel in the New Territories, beefing up its portfolio as the former Grand City Hotel in Sai Ying Pun is divested into Weave’s conversion pipeline.

“We are excited to have successfully acquired another property for Weave Living, and look forward to continuing our expansion across Asia-Pacific’s key gateway cities in the coming months,” Weave founder and group CEO Sachin Doshi said Wednesday in a release.

Doshi told Mingtiandi that the rental housing operator plans to enter the Australian and Japanese rental housing markets as well after securing eight locations in it’s home city and another one in Singapore.

Weave’s JV with Angelo Gordon entered into an agreement with Magnificent Hotel, a firm jointly owned by Shun Ho Holdings and Shun Ho Property Investments, to buy the 214-unit hotel at 338-346 Queen’s Road West in Sai Ying Pun for HK$14,960 per square foot of the 60,150 square foot (5,588 square metre) property.

Once the deal is closed, within three months or by August, Doshi said renovation work on the 32-storey building will start right away to convert the rooms into co-living studio apartments under Weave’s Studios brand. The asset is located near the intersection of Queen’s Road and Western Street, within 12 minutes of the University of Hong Kong campus at Pok Fu Lam.

“This new property will further enhance our multi-brand offering on Hong Kong Island, which aligns with our commitment to offer a diversified, flexible rental solution across our Weave Residences, Weave Suites and Weave Studios brands to discerning global citizens at different stages in life,” Doshi said. “This property, which saw a repeat investment from Angelo Gordon, also demonstrates the strong institutional support Weave Living continues to enjoy in our mission of providing hassle-free city living solutions to residents in the region’s main cities.”

The deal marks the second purchase under the JV in which Angelo Gordon maintains a significant majority stake and Warburg Pincus-backed Weave holds a minority interest while serving as the asset, development and operation manager.

Now with a gross asset value of $220 million, the partnership also holds Weave’s branch in Kai Tak that opened in February after the building was bought for $50 million in July 2021.

Doshi said he will continue working with global institutional investors once Weave enters rental accommodation markets in Australia and Japan in the “near future” as part of its regional expansion. The executive declined to provide further details since the plans are still in early stages.

Back in its home city, Weave sounds optimistic on a rebound in the rental housing market as Hong Kong slowly reopens its international borders, especially given the rising demand for flexibility and quality accommodation among renters.

“At least for our business, we already saw a significant rebound in the second half of last year,” Doshi said. “And a lot of people will be surprised by how strongly this market rebounds over the next six to 12 months.”

Exiting the Grand City Hotel gives Magnificent Hotel Investments some headroom to pick up a bigger asset in Tsuen Wan, a coastal town in the western New Territories.

The stock exchange document indicated that the Bay Bridge property was sold by an investment holding firm named Lafa Yette Hotel, which is wholly owned by the estate of the Tang Shing-bor, a veteran real estate investor whose family has been rapidly divesting properties since his death last year.

Cheng’s firm entered into an agreement to buy the 435-unit Bay Bridge Lifestyle Retreat at 123 Castle Peak Road in Ting Kau for HK$1.42 billion, or HK$6,564 per square foot of the 216,314 square feet property, which has a restaurant, swimming pool and gym. That price represents a 42 percent discount to the asset’s HK$2.46 billion valuation as of 15 December 2021.

Once the deal is closed, it will mark the 16th major asset to be divested by the Tang clan since August 2021, including a Kowloon industrial building sold for HK$733 million in February.

Cheng’s Magnificent Hotels is the owner of several high-rise hotels in HK, such as three Best Westerns, two Ramadas, and two hotels in London.

Nine hotels have changed hands in Hong Kong since the start of 2021 with a combined value of HK$7.92 billion, with HK$3.69 billion having been sold so far in 2022 after HK$4.23 billion worth of deals recorded during all of 2021, according to Eric Chong, director of capital markets research at Savills Hong Kong.

Chong noted that Weave has been the most active private equity real estate firm in this space after recording three out of the seven hotels acquired institutional investors during this stretch, with AEW, PGIM and Hines also having picked up hospitality properties during the period.

Price: HK$900m – around US$115m

Price per Key: HK$4.205m

THPT Comment: The young entrepreneur Mr Doshi is achieving his high ambitions very rapidly – like the idea that he is covering the spectrum of age in his offering…great partner in Angelo Gordon

First Seen: Mingtiandi

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