Hong Kong's leading real-estate developer Wheelock Properties said to be contemplating a share buyback to the tune of $3 billion, to be funded by HSBC.
As far as blue-chip brands in Asia go, they don’t come more pedigreed than Wheelock Properties or HSBC. The real estate conglomerate has turned to the bank to fund a proposed share buyback according to sources close to the matter.
A restructuring of Wheelock, which has $75 billion in assets on its books, has been speculated about since the $29 billion spin-off of Wharf holdings – a subsidiary in which it has a 58 percent stake.
Well Timed
Although Douglas Woo, the charismatic 40-year old at the helm of the company, has remained silent on any further corporate developments, a source close to the deal between HSBC and Wheelock says the developer has arranged a line in excess of $3 billion with which to fund a buyback. If a buyback is indeed imminent, Woo has timed it well - at close to HK$45 a share, the stock is well off its’ 52-week high of HK$63.
«The most significant thing for me is not the buyback itself but what it signals for Hong Kong realty,» says one private investor who worries about the dip in the price of prime real estate on the island in 2018 and the pessimism on the forward. For him and several other tycoons, a buyback of this nature reiterates the bullish stance that not only Wheelock, but also the institutions that lend to it, are willing to take. «None of us can know which direction prices will take, but if the Woos are willing to bet they will rise, theirs is the most educated guess.»
Controlling Stake
The family - which has a controlling stake in the group flagship - is believed to want to «significantly bolster» their shareholding while the stock languishes. In previous years, Wheelock has outperformed the Hang Seng Index as a benchmark. Although it closed 2018, off 19 percent from its highs that year, in the previous year the stock rose by almost 50 percent against the index’s gain of 25 percent.
