Tycoon Joseph Lau Luen-hung (劉鑾雄) seems to want to play Santa Claus by overseeing the sale of rental property assets and delivering special dividends to his shareholders.
In one of his biggest property deals in Hong Kong, Lau has allowed his group flagship Chinese Estates Holdings (00127.HK) to sell Windsor House, a pricey Causeway Bay asset, for HK$12 billion.
Who’s the buyer? Well, it’s none other than Lau himself!
Since September 2014, the businessman also bought The One and Silvercord properties in Tsim Sha Tsui and a Macau residential project by spending over HK$20 billion.
Unlike other property tycoons who tend to cash in on private property investments via listed firms, Lau has adopted a different approach but still managed to get decent results.
Chinese Estates cashed out HK$53 billion, including the latest property sale, from seven properties in the past 16 months.
Amid the asset sale, Lau returned over HK$20 billion dividends to shareholders — including himself, as he owns a majority stake in his flagship.
What explains the sudden generosity?
As Chinese Estates noted recently, retail businesses have reached a peak, especially in prime tourist districts like Causeway Bay, and there is no sign of mainland tourists flooding to the city in great numbers like before.
On top of that, the US rate hike and potential follow-up actions in Hong Kong could result in higher borrowing costs for local firms.
Against this backdrop, it is seen as a good time for Chinese Estates to maximize its returns and shield itself from a potential property market downturn.
Lau was generous not just to his shareholders, but also toward his daughter Josephine.
Last month, he bagged a record-breaking HK$375 million (US$48.4 million) 12.03-carat blue rock and named it “Blue Moon of Josephine”.
In another deal, he spent HK$222.3 million on a 16-carat pink sparkler that he christened “Sweet Josephine”.
All this generous spending came after the 64-year-old tycoon was convicted by a Macau court last year for bribery and money laundering.
The Chiu Chow-born and Canada-educated businessman had humble beginnings in life as he started out an electric fan trader before finding fun in the stock market.
In the 80s, Lau made his name by buying undervalued assets. He made a hostile bid for Hongkong and Shanghai Hotels but failed.
When he accumulated enough capital, he moved to property and bought Chinese Estates. He kept buying assets – most notably the Tung Ying Building during the SARS crisis – and is now laughing his way to the cashier.
The flamboyant tycoon loves to make headlines. Last month, he sealed a record breaking HK$12.5 billion Mass Mutual Tower sale to Evergrande Real Estate (03333.HK).
Evergrande chairman Hui Ka-yan, a close buddy of Lau, bought over HK$20 billion worth of properties from Chinese Estates.
Now, the question is: how long will this continue?
Given that Chinese Estates still has over HK$44 billion in assets, there should be some more deals in the pipeline, especially given its comments that it will remain “skeptically proactive” in the property markets of Hong Kong and elsewhere.
Other than properties, Chinese Estates is also involved in brokerage, securities investments, money-lending and cosmetics trading businesses.
Just like Santa Claus, it is likely that Santa Joseph will be coming to town. Be prepared.
Joseph Lau and the gift that keeps on giving (Nov. 12, 2015)
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