CK Asset Holdings in talks for London project

London

CK Asset Holdings Ltd is in preliminary talks to invest in Capital & Counties Properties Plc's Earls Court project in a sign of investors' faith in the long-term prospects of London's luxury housing market, people with knowledge of the discussions said.

The Hong Kong company founded by billionaire Li Ka-shing is considering buying some or all of the development project, one of the largest in central London, the people said, asking not to be identified as the discussions are private. Talks are at an early stage and there's no guarantee that a deal will be struck, they said.

A spokeswoman for Capital & Counties declined to comment. A spokesman for CK Asset wasn't immediately able to comment.

The market for luxury homes in London has been pummelled by tax hikes and uncertainty surrounding Brexit, which have combined to push down land values and weighed heavily on the Capital & Counties stock. The slump in its shares and a proposal to split up its assets are attracting interest from international developers with the balance sheet to undertake huge long-term projects and withstand repeated downturns in the market.

The Earls Court holdings are valued at about 707 million pounds (S$1.3 billion) following a series of writedowns over the past three years, Capital & Counties said in July. The 31-ha site is split into a series of parcels, some of which are owned jointly with other investors, and that may restrict the company to selling only parts of the project, which has permission to build 7,500 homes.

Capital & Counties is exploring separating its properties in the Covent Garden district from the assets in the Earls Court area to appeal to different types of investors and attract higher valuations.

The firm's market value has slumped this year to about 2.2 billion pounds, which represents a 21 per cent discount to the company's net asset value.

Rival Shaftesbury Plc, which owns a nearby estate comparable to the Covent Garden holdings, trades at a 7 per cent discount to the value of its assets.

The company has spent more than a decade preparing the Earls Court land for development and large parts of the site are now ready for work to start. Construction is already underway on about 800 homes at Lillie Square, part of the site owned in venture with Hong Kong's Kwok family.

Capital & Counties said it generated 245 million pounds from the sale of the first phase of the project and 80 per cent of the second phase has now been sold. BLOOMBERG