A century-old wealthy family that rose from Shanghai

1977 years.

At the beginning of the year, the news about the 'metro station overpass' became clearer, with the metro company to begin bidding on January 14 for the site of the former General Post Office.

After the original site was demolished, a property was built on top of the station, namely the 'Central Station Property'.

The MTR project is the largest public works project in Hong Kong's history.

The entire project is planned to take eight years to complete and will cost approximately HK$205 billion.

The first phase of the project runs from Kwun Tong in Kowloon, through the Cross-Harbour Tunnel to Central on Hong Kong Island, with a total length of 15.6 kilometers and 15 stations, costing approximately HK$56.5 billion.

The funding sources are mainly long-term loans from banks guaranteed by the Hong Kong government; the MTR Corporation raises funds through share sales in the securities market; and the profits from joint development of station above-ground properties by the MTR Corporation and real estate companies are used as equity.

Central Station and Admiralty Station are the most important and busiest stations on the MTR. Central Station is the terminus of the first section of the MTR and is located in Hong Kong's most bustling banking district. Admiralty Station is the first station after crossing the Cross-Harbour Tunnel and is also a transfer station for the Hong Kong Island East Line. Nearby are famous buildings such as the Hong Kong Government Offices, the Supreme Court, the Navy Headquarters, the Police Headquarters, the Red Cross Society of Hong Kong, and the Hong Kong Museum, and it is very close to the Central banking district.

Some say that the Central and Admiralty stations are like the two legs of a chicken, and the properties built on top of them could be the most profitable along the entire MTR line. Real estate developers are all "drooling with envy."

CK Asset Holdings Limited.

Chen Guangliang was sitting in the chairman's office, communicating with his son Chen Wenjie at the conference table.

"To win the bid, you need to understand the subway company's intentions and be willing to humble yourself to gain their approval!"

Chen Wenjie felt somewhat uncomfortable with his father's first words.

He thought for a moment and said, "The MTR Corporation should be short of cash right now. If we want to win the bid, it's simply because we have this advantage. At this time, Cheung Kong Holdings has a cash flow of HK$3.8 million, but Ping An Bank can provide a lot of funds, so in this respect, our advantage is very obvious."

Despite CK Asset Holdings' annual profit of nearly HK$300 million and relatively low cash flow, most of its cash flow has actually been invested in overseas projects.

Moreover, CK Asset Holdings has very low debt!
Chen Guangliang said, "Having cash flow isn't enough!"

Chan Man-kit continued, “After news of the tender for the development above the subway stations came out in the second half of last year, we also inquired about the MTR Corporation’s intentions. We believed that the MTR Corporation’s idea was to recoup cash to repay loans from the Hong Kong government and banks. So, if the development above the Central and Admiralty stations were to follow the MTR Corporation’s intentions, it would of course be sold in tiers. However, for us, especially after Man-kai and I discussed it, Cheung Kong Industrial Group wanted to invest in commercial buildings, so we wanted to buy the properties.”

Chen Guangliang nodded. In his previous life, one of the two buildings sold for HK$6 million and the other for HK$9.8 million, totaling HK$16 billion. In this life, due to the overall improvement in Hong Kong's economic level, the property value has also increased by more than 10%.

All told, these two buildings are worth 18 billion.

"It's very simple. In the tender with the MTR Corporation, the plan was naturally to sell the units by floor to quickly recover funds. But when the real estate market peaked in 1978, when it was possible to 'sell off-plan,' Cheung Kong Industrial and Cheung Kong Holdings would then buy the entire building at market price. The MTR Corporation would naturally agree, since the price is the same whether the units are sold by floor or the entire building."

Chen Wenjie's eyes lit up, and he immediately said, "Yes, that way we've achieved the subway company's goal. Now, we need to consider how to defeat our competitors, especially Hongkong Land."

Chen Guangliang immediately said, "Hongkong Land will definitely specify 'rent collection' as the purpose in their tender documents, so they have already lost. On the contrary, we should worry about the Chinese capital companies that are not strong enough. They don't have the strength to stay and 'collect rent', and they will choose 'tiered sales' instead."

Chen Wenjie couldn't help but admire his father's experience and wisdom. He realized that Hongkong Land would never actually sell the property by "layers"—that was their tradition. Even Cheung Kong Holdings wouldn't actually consider selling the property by "layers"; it was only when Cheung Kong Industrial Group joined in that they considered buying the entire building.

“Father is right! According to the normal practice, the subway company provides the land, and we provide the construction costs and other expenses, with the profits split 50/50. Since our goal this time is to get Cheung Kong Industrial Group to buy the property, Cheung Kong only needs to prioritize its reputation and can compromise on profits, changing the profit split to 51% for the subway company and 49% for us. In addition, we can pay the 'land fee' for the subway company, reducing their interest expenses. This should guarantee us the bid!”

Chen Guangliang nodded in satisfaction and said, "You're right! We'll take a small loss on the profit sharing, and we'll also pay the subway company over 2 million for the land valuation of the Central Station redevelopment project, so they can use it to repay their loans. They'll naturally be very happy. In addition, you should state in the tender document that we guarantee the subway company will definitely profit from this cooperation, to put their minds at ease."

"Ok"

If the split were changed to 52%:48%, the odds of winning would naturally be higher, but in that case, Cheung Kong would become a joke.

Bidding is the same for everyone: if the price is too high, you might become a laughing stock; if the price is too low, you might lose the opportunity.

Central, Hong Kong Island, is Hongkong Land's "home base." Back then, Hongkong Land's founder, Paul Chater, participated in the Central reclamation project, securing large tracts of land at preferential rates from the Hong Kong government. Hongkong Land owns approximately 10 commercial buildings in Central. Gloucester Tower is located on one wing of the future Central MTR station, which happens to be situated on Chater Road. To the south of Chater Road lies Chater Garden Plaza.

The names of these properties and streets, and their owners, reveal Hongkong Land's status in the Central District.

Of course, after World War II, Hongkong Land also suffered from attacks by the Chan family.

First, 'Cheung Kong Plaza' became the first high-end shopping center in the central district, while the properties in this area previously owned by Hongkong Land are now divided on both sides of the street and have no chance of being merged (mainly because Lane Crawford Building is under the Cheung Kong Group and was developed into Cheung Kong Plaza).

Secondly, the "Central Land King" is the former "Kang Lok Building/Jardine House" site, which was acquired by Cheung Kong Holdings for HK$3 million and developed into the Shangri-La Hotel.

Today, the Chan family owns a total of nine buildings in Central: Shangri-La Hotel, Shangri-La Building (the former site of Shangri-La Hotel), Poly Building, Cheung Kong Plaza, Lane Crawford Building, International Group Centre, International Commerce Centre, Ping An Bank Building, and Hilton Hotel.

In fact, Shangri-La Building occupies 3.6 square feet. If it were to be redeveloped, it would be built into two separate buildings. Because it is difficult to get approval for the construction of skyscrapers in this area of ​​Des Voeux Road, it would be better to build two buildings directly and connect them.

Therefore, the bidders for the Central and Admiralty stations of the MTR Corporation will include major British real estate developers and builders such as Hongkong Land, Swire Properties, and Kinmen Construction, while Chinese real estate and construction companies include Cheung Kong Holdings, Sun Hung Kai Properties, New World Development, and Henderson Land Development.

Overall, the two sides are evenly matched.

But in reality, the media focused on 'CK Asset Holdings' and 'Hongkong Land'.

Victoria Harbour Properties.

Li Jiacheng sat in his office, looking at the news in the newspaper, a regretful expression on his face.

Victoria Harbour's strength is still too weak; at best, it can be considered a 'medium-sized Chinese-owned real estate company'. Although from the outside, Cheung Kong Holdings' development in recent years has been quite good, with profits exceeding HK$1200 million and HK$1500 million in 1975 and 1976 respectively, its development can be described as very rapid.

但这点利润，不说和长实集团相比，就是和新鸿基（8500万、9500万）、新世界发展（5000万、5500万）、恒隆（3500万、4500万）、合和地产（3000万、3800万）相比也差的远。

It can only be comparable to Wing Tai (1100 million, 1480 million), but Wing Tai is only one of Li Ka-shing's real estate companies (listed). Li Ka-shing also has Henderson Land Development, which is not listed and is his main real estate strength.

In addition, although Chinachem is not listed, its profit level is similar to that of New World Development; Dah Chong Hong Properties and Sino Land also have profits of around 20 to 30 million.

As for Yen Cho-ho's Ho Shing Properties, although it only made a profit of 1000 million in 1976, it will have a boom year in 1977.

"Unfortunately, even with last year's profit of HK$1500 million, Victoria Harbour only has HK$2000 million in cash flow. In addition, there are loan commitments from two banks, which amount to only about HK$5000 million, which is not enough to qualify for this MTR station development rights."

"In that case, it would be better to invest these funds in land development, which could significantly expand the business." When Victoria Harbour Properties went public in 1972, it raised only HK$1000 million, one-tenth of Hang Lung and Sun Hung Kai at the time; but now, Victoria Harbour Properties can earn HK$1500 million a year, one-sixth of Sun Hung Kai and one-third of Hang Lung. Overall, it can be considered to have developed rapidly.

the other side.

In his office, Chen Wenjie met with his uncle, Yan Zuhe.

In 1975, the two companies each contributed HK$2000 million to jointly purchase a large amount of industrial land and sites. Now, in 1977, the demand for industrial plants in Hong Kong is strong, and prices have risen sharply, so they have obviously made a considerable profit.

“Uncle, this year (1977), we are going to sell our industrial buildings by floor. This way, we can use the money we earn to buy other land as soon as possible.”

Yan Zuhe said excitedly, "This year's sales should be around 400 million, and each company is expected to make a profit of 60 to 70 million. What you said makes a lot of sense. With this revenue, we can invest it in new real estate projects. By the way, Wenjie, I'm thinking of investing in commercial land in Tsim Sha Tsui. What do you think?"

Chen Wenjie asked, "Do you want to invest in a commercial building or build a hotel?"

Yan Zuhe, the "hotel owner," was vaguely excited because this was a very important decision.

Back in 1967, his initial real estate investment was only HK$500 million. Now, he dares to invest hundreds of millions in projects. And a four- or five-star hotel is equivalent to a medium-sized listed company.

Chen Wenjie knew that his uncle was taking a rather big step this time, so he was inevitably a little uneasy.

"We at Cheung Kong will continue to auction off waterfront land in Tsim Sha Tsui, intending to make long-term investments!"

Yan Zuhe's eyes lit up; this meant that Tsim Sha Tsui had a very good future.

"Um"

That's enough!
After seeing Yan Zuhe off, Chen Wenjie sat in his office, lost in thought.

In reality, if he were the uncle, he would definitely use the proceeds from the sale of the 'Industrial Building' by floor this year to quickly invest in real estate development; after all, for a medium-sized real estate company, rapid turnover is the key.

However, he couldn't make decisions for his uncle forever. Since his uncle had his own opinions, and those opinions weren't too problematic, he naturally wouldn't say anything more.

Today, my uncle's Ho Shing Properties has HK$1000 million in rental income and property development revenue (1976), making it a small to medium-sized real estate company; however, if industrial sites are sold in tiers this year, Ho Shing Properties will undoubtedly become a medium-sized real estate company.

Moreover, on the other hand, Hesheng Real Estate also has four or five development sites, which are a combination of rent collection and development.

Global Group Center.

This 40-year-old building is already quite well-established, and it definitely needs to be rebuilt in the 1980s.

In his office, Chen Guangliang convened a secret meeting with Chen Wenming, Chen Guangcong, and Chen Wenbo.

"I have decided to acquire Wharf Holdings and launch the 'restructuring and relocation' operation of Universal Group!"

Chen Wenming and Chen Wenbo immediately showed excited expressions; this was an important strategic move!
By the end of 1973, Universal Group's cash flow had reached $3 million, and it subsequently generated $2.5 million in net profit every year, which is equivalent to a profit of $10.5 billion.

That's not all. In 1974, they invested $8000 million in the Japanese stock market and another $2 million in the real estate markets of Japan and the United States.

Of course, during this period, there were also dividends of US$3 million, of which Chen Guangliang received US$2.6 million, of which US$2 million was used for gold investment in the family office.

Even so, the Global Group currently has nearly $500 million in cash flow in its accounts, and nearly $200 million in securities.

It's fair to say that the Global Group urgently needs a way out for its funds.

Chen Wenming immediately said, "Father, I have already found out that Hongkong Land holds less than 20% of Wharf Holdings' shares. Moreover, Wharf Holdings has issued a lot of convertible bonds for the construction of Harbour City, and another batch will arrive this year, at which time Hongkong Land's shareholding will be diluted further."

Wharf Holdings is very conservative in its development, using conservative methods such as issuing convertible bonds for funding, and its properties are only for rent and not for sale. The total investment in Harbour City is as high as HK$20 billion (a plan of more than ten years).

Commercial real estate is inherently slow to recoup its investment, so Wharf Holdings will only be gradually dragged down by this.

If Chan Kwong-leung were the chairman of Wharf Holdings, he would inevitably strike a balance between 'renting and selling', investing a certain amount in real estate development projects each year to obtain a continuous stream of profits, and then gradually reinvesting in commercial real estate.

Chen Guangliang nodded and said, "For this acquisition, we will first spend six months acquiring 20% ​​of the shares from the market. As for our next move, we will observe the situation further!"

At that time, Universal Group did not hold any shares in Wharf Holdings.

However, Ping An Investment holds a 5% stake in Wharf Holdings, which it can sell to Universal Group at any time.

Chen Guangliang's "observation" was not due to funding issues, but rather because he planned to "be polite first, then resort to force" while simultaneously gaining favorable political opportunities.

Therefore, let's first hold a total of 25% and become the largest shareholder.

"it is good"

Then, everyone discussed the Universal Group's 'ship reduction plan,' which would take another two years, starting around the end of 1978 and lasting for three to five years.

"By the way, we can't let our guard down when it comes to real estate investment in Manhattan, USA!"

The acquisition of Wharf Holdings would cost at most five or six hundred million US dollars, so Universal Group still has a large amount of cash flow.

Currently, office buildings in Manhattan, USA, are still in a slump and are not expected to truly rise until the 80s, when Reagan took office and ended the inflation in the United States.

Chen Wenming said, "My second brother has already found two office buildings and invited us to come and discuss them."

The second brother is naturally Chen Wenjin, the eldest son of the second wife.

"Yes, we aim to complete the investment in the Manhattan office building this year."

"Yes, Father." (End of Chapter)