Chinese Estates Holdings, controlled by the family of tycoon Joseph Lau Luen-hung, said it did not sell a single property in the first half while reporting a 7 per cent decrease in profit to HK$785.9 million (US$101.4 million) because of declines in rental income and fair value of its investment properties as a result of the Covid-19 outbreak.
Revenue dropped 17.5 per cent to HK$222.7 million in the first six months of the year, from HK$269.9 million in the same period in 2019, the company said in its results announcement on Thursday.
“The drop in rental income of the group during the period was mainly due to the surrender of lease by an anchor tenant of one of the investment properties in the United Kingdom,” the developer said in the filing to the stock exchange. The company added that it had extended rent concessions to certain tenants to ease their hardship in view of the Covid-19 pandemic.
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The anchor tenant of River Court, a freehold office building in Fleet Street, London, moved out in the first quarter of 2020, according to the statement. River Court provides a total net internal area of about 431,324 square feet, together with certain car parking spaces. While the retail portion of River Court was fully let, the office accommodation was vacant, the statement added.
Overall property rental income fell 19.2 per cent to HK$211.5 million in the first half, from HK$261.8 million a year earlier.
Chinese Estates also said that the spread of the pandemic resulted in an unrealised loss on fair value changes of investment properties of HK$426.0 million, mainly from its Harcourt House office property in Hong Kong.
The developer said it did not dispose of any trading property during the period. In 2018, it sold a single home at its 55 Conduit Road luxury project in Mid-Levels for HK$286.2 million, contributing HK$125.4 million to its bottom line. The apartment complex had also set a record for having Hong Kong’s most expensive car parking lot.
Without new home projects, Chinese Estates has since morphed into a property investment group under the chairmanship of his son after Lau handed over the reins amid reports of failing health.
Lau, its former chief executive, is the fourth richest man in Hong Kong with a net worth of US$16.7 billion, according to Forbes.
Lau was convicted of bribery and money-laundering in Macau in 2014, but avoided a five-year jail term by not travelling there. In 2019, Lau filed a lawsuit, which was later withdrawn, to challenge the Hong Kong government’s proposed extradition bill that triggered the city’s worst political crisis in decades.
Shares of Chinese Estates, which rose as much as 0.4 per cent in the morning session, fell as much as 1.6 per cent after the results announcement during the lunch break.
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More from South China Morning Post:
- Hong Kong developers feel the pain from Covid-19, social unrest as rental incomes shrink and tenants surrender office space
- Li Ka-shing’s CK Asset issues first profit warning as Hong Kong and UK businesses suffer, CK Hutchison says retail earnings might be halved this year
- Chinese Estates, under Hong Kong’s fourth richest tycoon, says profit set to fall for a fifth year as company sells zero homes
- Chinese Estates, selling a single home last year, posts a 72 per cent plunge in profit as sales and equity investments shrink
- Who’d buy a car park space for HK$4.8 million? Someone on Conduit Road just did