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Cheung Kong cancels sale of hotel rooms after regulator's warning
Source: Bloomberg News |
May 15, 2013, Wednesday
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CHEUNG Kong Holdings Ltd, the developer controlled by Asia's richest man, is canceling the sale of HK$1.4 billion (US$180 million) of hotel rooms after Hong Kong's securities regulator began a probe into the transactions.
Cheung Kong, controlled by billionaire Li Ka-shing, will return all deposits and part payments plus interest to all the buyers of the individual rooms at the Apex Horizon project in the city's west, after being notified by the Securities and Futures Commission that the sales constitute an unauthorized "collective investment scheme," the developer said in a statement to Hong Kong's stock exchange.
The sale of the 360 hotel rooms in February drew the government's ire as it was seen as a means of skirting an increase in taxes on apartments that was aimed at cooling prices. Within days of the sale, the government extended the taxes to include hotels and other commercial property, and sent inspectors to check that Apex Horizon units weren't being used as residences.
"The government is really sending out a message that there's no room for fooling around," Credit Suisse Group AG analysts Cusson Leung and Joyce Kwock wrote in a note to clients yesterday. "The time for making super normal returns in property will be more difficult going forward."
New World Development Co and Great Eagle Holdings Ltd have this month unveiled plans to spin off hotel assets in the city that may raise as much as a combined HK$5.6 billion.
"We do not agree" with the SFC, Cheung Kong said in a separate e-mailed statement. The decision was made "as the difference in legal opinion may lead to legal uncertainty in respect of the sale and purchase of the hotel room units, which may affect the buyers' ownership, mortgage arrangement or subsequent sale of the hotel room units," the firm said.
Hong Kong Development Secretary Paul Chan said in February that the government sent inspectors to make sure the rooms weren't used as residential apartments.
Hong Kong's securities law requires the regulator's authorization before a collective investment scheme can be marketed to the public.
Cheung Kong, controlled by billionaire Li Ka-shing, will return all deposits and part payments plus interest to all the buyers of the individual rooms at the Apex Horizon project in the city's west, after being notified by the Securities and Futures Commission that the sales constitute an unauthorized "collective investment scheme," the developer said in a statement to Hong Kong's stock exchange.
The sale of the 360 hotel rooms in February drew the government's ire as it was seen as a means of skirting an increase in taxes on apartments that was aimed at cooling prices. Within days of the sale, the government extended the taxes to include hotels and other commercial property, and sent inspectors to check that Apex Horizon units weren't being used as residences.
"The government is really sending out a message that there's no room for fooling around," Credit Suisse Group AG analysts Cusson Leung and Joyce Kwock wrote in a note to clients yesterday. "The time for making super normal returns in property will be more difficult going forward."
New World Development Co and Great Eagle Holdings Ltd have this month unveiled plans to spin off hotel assets in the city that may raise as much as a combined HK$5.6 billion.
"We do not agree" with the SFC, Cheung Kong said in a separate e-mailed statement. The decision was made "as the difference in legal opinion may lead to legal uncertainty in respect of the sale and purchase of the hotel room units, which may affect the buyers' ownership, mortgage arrangement or subsequent sale of the hotel room units," the firm said.
Hong Kong Development Secretary Paul Chan said in February that the government sent inspectors to make sure the rooms weren't used as residential apartments.
Hong Kong's securities law requires the regulator's authorization before a collective investment scheme can be marketed to the public.
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