201308 TKO Matrix

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TKO - The Matrix

Idea

That a REIT be the retail manager managing all the footbridge-linked retail GFA of the TKO gov’t sale sites.

Background

The blueprint for developers of the 11 TKO sale sites with a total residential GFA of 5.4 million sf have been basically settled with SHKP controlling exclusively the “gateway” to the MTR station which is as far as 400m away from those sites nearest the waterfront.

The total retail GFA for all 11 sites (excluding the Wings retail GFA of 127,000sf) amounts to 873,000sf. The GFA are however discrete among the sites each having around 23,000sf to 147,000sf retail GFA. They might only be attractive to a few tenants and it is not optimistic that a very sound rental be captured if patronized mainly by residents within the site, while the four SHKP lots holding about 240,000sf, 28% of the above total and the three Wheelock lots 32%, being the two highest single owners on that basis. Besides, developers of other sites like Lai Sun, Ka Wah and even Wheelock do not have a proven track record of managing small to medium retail space well. Letting SHKP manage their portion would improve the value of their holdings while having all the retail GFA linked up by footbridges and managed as a whole would allow SHKP to enjoy others’ possibility of weekday brand outlets plus weekend waterfront seaview F&B in addition to its own asset value of being proximate to MTR. As a result, it would be like a “Matrix” unleashing the synergy, and could also be sold to interested investor.

On the other hand, by the time the residents have moved in, it would become a very bad experience to walk outdoor at grade 400m to and from the MTR station every day unless the waiting time for feeder bus, if available, could be justified. It is however found that no footbridge requirement has been stipulated under the leases of all 11 sites for the developers to connect to each other facilitating a through pedestrian flow. To effect this, a lease modification with premium would be required. Unless otherwise altered or endorsed by the Lands D HQ, it is the Government’s policy that lease modification would not be entertained within 5 years from the date of land sale.

Implementation

It is basically costless to SHKP if the Footbridge connection would never be effected, but reaching an agreement with other developers during their design inception stage and at the same time allowing the design possibility within SHKP

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sites to receive the footbridge would create a win-win option when the opportunity for footbridge connection comes. To provide incentive to other developers in effecting their footbridge connection towards SHKP’s “gateway”, the lease modification premium they accepted could be converted into a recurrent expense to be deducted from the rent received of their retail space on a pro-rata basis such that the higher the premium, the lower the percentage of the profit rent SHKP charge against them and vice versa.

On legal and political aspects, despite gov’t gazette would be required for the footbridge connection, the population in-take there would easily warrant District Councilor’s step-in, if necessary, and facilitate the legitimacy.

Ivan Tam 30 August 2013

66A66B

66B2

66C1 66D1

66D266C2

68A1 68A2 68B2

68B1

[居屋用地]65C2

65C1

TKOTL 113 (Site 66A)Retail GFA: 72,087 ft2

Residential GFA: 720,811 ft2

Owner: SHKP

TKOTL 76 (Site 66B)Retail GFA: 66,199 ft2


Owner: SHKP

SHK

Wheelock

K. Wah (with Sino)

Lai Sun

Chinachem

Public Housing

TKOTL 112 (Site 65C1)Max. GFA: 569,459 ft2

Owner: Wheelock

TKOTL 124 (Site 65C2)Max. GFA: ~1,097,964 ft2

Owner: 居屋, Govt(Source: 18/1/2013@HKET)

[公屋用地] Area 65 Public Housing

TKOTL 126 (Site 68B2)Retail GFA: 147,585 ft2


Owner: Wheelock



Owner: Chinachem

TKOTL 115 (Site 66D1)Retail GFA: 27,050 ft2


Owner: K.Wah

TKOTL 118 (Site 66D2)Retail GFA: 80,482 ft2


Owner: SHKP

TKOTL 125 (Site 68A1)Retail GFA: 85,951 ft2


Owner: Wheelock

TKOTL 95 (Site 68A2)Retail GFA: 114,669ft2


Owner: Lai Sun Group &郭炳湘

TKOTL 114 (Site 66C1)Retail GFA: 23,422ft2


Owner: SHKP

TKOTL 117 (Site 66C2)Retail GFA: 69,514 ft2


Owner: K. Wah & Sino



Owner: Wheelock

Other Developer’s Retail GFA

Other Developer’s Retail GFA

SHKP’s Gateway to MTRFootbridge Footbridge

Not to scaleLot boundaries

FiestaDinning

FiestaDinning

FiestaDinning

Documents

201308 TKO Matrix