Hong Kong protests spook owners of co-working space operator The Executive Centre, who shelve planned US$750 million sale

By Cheryl Arcibalcheryl.arcibal@scmp.com / https://www.scmp.com/business/companies/article/3026777/hong-kong-protests-spook-owners-co-working-space-operator?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | September 12, 2019 2:02 AM SGT
The boss of shared office-space operator The Executive Centre (TEC) said the decision to place on hold a planned sale of its shares for US$750-million was "sensible" given the uncertainty gripping Hong Kong amid unprecedented social unrest.
The decision of TEC shareholders HPEF and CVC Capital Partners to pause their disposal of the co-working operator is the latest indication that the worst political crisis in the city's history is souring business sentiment, increasing the likelihood that Hong Kong will fall into a recession. Tourist numbers and retail sales, major pillars of the city's economy, have suffered huge declines since the massive street rallies began in June.
TEC is 70 per cent and 20 per cent owned by private equity firms HPEF and CVC, respectively, while the remaining 10 per cent is held by the company's management, according to Reuters, who originally reported the sale had been halted.
Salnikow said despite the current political climate in Hong Kong, the company is having a "banner year" with earnings on track to grow by 24 per cent to US$47 million, and occupancy at 93 per cent from June to August.
"Occupancy will continue above 90 per cent for the coming months, based on our confirmed contracts," said Salnikow.
Property consultancy Colliers International said the instability could actually help co-working space providers as tenants seek flexibility at a time of uncertainty.
"In the short term, occupiers may drop space that they had taken for project space or expansion. However, if instability persists then we should see occupiers taking up flexible workspace at scale rather than commit to leases or indeed the capital needed for their own offices," said Jonathan Wright, head of flexible workspace, Asia, at Colliers.
"Flexible workspace should benefit from market instability," Wright added.
Founded in 1994, TEC operates 12 centres in Hong Kong, which contribute 30 per cent to its revenues. It has recently opened the second phase of its Prosperity Tower location in Central, adding over 100 workstations. In December, the company is set to open a 390-workstation centre at the...