McDonald’s has successfully sold a Kowloon property for HK$72.4 million (US$9.3 million), marking a significant milestone in its strategic initiative to divest eight retail locations across Hong Kong. This sale brings the total proceeds from the campaign to HK$333 million, representing the halfway point in the company’s planned asset disposal.
The buyer of the Tai Kok Tsui property, situated within the Tai Fong Building of Cosmopolitan Estate, is Mega Champ. The transaction, officially recorded on November 26th, encompasses two ground-floor retail spaces and an office unit located on the first floor.
According to Land Registry records, McDonald’s originally acquired the property in 1989 for HK$24.1 million. The recent sale translates to a substantial 200 per cent gain, generating a profit exceeding HK$48 million for the fast-food giant. McDonald’s has not released a public statement regarding the transaction.
This strategic move to sell off real estate assets was initially announced in late July, with McDonald’s revealing plans to offload eight Hong Kong retail properties valued at an estimated HK$1.2 billion. This initiative presents a unique opportunity for investors to acquire fully tenanted assets as McDonald’s undertakes a review of its local real estate portfolio. The properties included in the sale are strategically located in prime areas such as Tsim Sha Tsui, Causeway Bay, Mong Kok, Kennedy Town, Tai Kok Tsui, Yuen Long, Tsuen Wan, and Tsz Wan Shan.
The Tai Kok Tsui corner property boasts a considerable area of 9,230 square feet, according to information provided by property consultancy JLL. Besides McDonald’s, the property is also tenanted by a pharmacy and a fruit and vegetable vendor, indicating a diverse mix of businesses.
JLL highlights the property’s advantageous location in a bustling and densely populated area, describing it as a “prime location in a lively and densely populated area”. The consultancy further notes that the property benefits from constant foot traffic and offers businesses exceptional exposure due to its surroundings, which include industrial buildings, a service apartment, and a vibrant mix of restaurants.
Prior to this transaction, McDonald’s successfully completed the sale of three other properties in Hong Kong:
- Yuen Long Property: On November 5th, a shop in Yuen Long was sold via public tender for HK$77.4 million. The three-storey property, located in Yuen Long Trade Centre and spanning 9,695 square feet, was purchased by Acc Investment. This sale resulted in a return of more than eight times the company’s initial investment of HK$9.3 million in 1987.
- Mong Kok and Kennedy Town Properties: The following week, two additional shops were sold for a combined HK$183 million.
- A 7,357 square foot property in Mong Kok’s Good Hope Building was acquired by Verity Partners for HK$83.2 million.
- A two-storey shop at 12 Smithfield Road in Kennedy Town, encompassing 6,826 square feet, was sold to Meridian Capital for HK$100 million.
Notably, Ng Yin serves as the director of both Verity Partners and Meridian Capital, with both firms incorporated on September 22nd, as indicated by Company Registry records.
McDonald’s appointed JLL as the exclusive agent responsible for identifying potential buyers for the eight properties. The public tender process concluded on September 16th. The properties varied in size from 6,800 square feet to 19,000 square feet, and JLL indicated that they could be sold individually or as a complete portfolio.
Despite the sale of these properties, McDonald’s has confirmed that it will continue to operate its restaurants in all eight locations under long-term lease agreements, ensuring continued service to its customers.
