Chinese billionaire sells ‘ghost town’ luxury tower for more than $100m
Private equity company Blackstone is looking to expand its local build-to-rent empire and has gone unconditional on the purchase of the Lotus Tower
QLD Business
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Global private equity company Blackstone will convert Brisbane’s “ghost tower” into a build-to-rent asset after finalising its purchase from Chinese-backed group R&F Property Group.
Sources say Blackstone has gone unconditional on the $100m plus purchase of the 20-storey luxury apartment tower after the building sat vacant for almost two years.
The Lotus Tower at Kangaroo Point, built by Zhang Li’s R&F Property Group, remains locked up despite final building approval being granted in September 2019.
That was the same year its Australian operation posted a big loss and received a big cash injection from its Hong Kong parent.
The delays in the sale and occupancy of the building, which features 200 apartments, town homes and penthouses with stunning views of the Brisbane River, comes four years after liquidators were temporarily appointed to one of R&F’s subsidiaries, R & F Mega Property.
A R&F spokesman said that the Lotus Tower was recently sold in a bulk transaction to an undisclosed buyer with settlement occurring in the near future.
Industry sources the tower was on the market for about $120m before the coronavirus pandemic hit which stalled the sale process.
As well as build-to-rent operators the tower also attracted interest as a vertical retirement option from Australian-based Serenitas Group which is backed by Singapore’s GIC and Brisbane-based GreenFort Capital.
Sources say Blackstone, which has a global relationship with R&F, will be converting into a build-to-rent asset.
The Blackstone deal is believed to have been originated and brokered by R&F’s former national sales & marketing director Jon Quayle.
Mr Quayle, now developing his own projects, declined to comment when asked about the potential sale of the owner.
The tower had an original gross realisation of about $150m less expenses if all of the apartments and penthouses were sold individually.
Blackstone forged into the build-to-rent sector in 2019 in a deal worth more than $300m with the family of prominent Melbourne developer Max Beck.
Blackstone is now working with Beck Property, run by Mr Beck’s son Sam, to build the next stage of its $1.5bn Caulfield Village mixed-use project in eastern Melbourne being developed with construction group Probuild.
Others are also active in build-to-rent with US group Greystar launching a major fund and securing sites, with specialist Sentinel Real Estate and diversified Oxford Properties moving into the nascent Australian market.
The R&F Group caused a stir in the sector in 2014 when it vowed to buy $500m worth of prime sites across the country. Since then it has developed several large properties, including Brisbane One. But its operations have had a bumpy ride.
R&F Mega Property was temporarily placed into liquidation by the Victorian Supreme Court in 2017. A week later that winding up order was terminated by the court and the firm handed back to the directors, who denied it was at any time insolvent.
R&F Development Holdings, the flagship company of the group in Australia, posted a loss of $22.47m in 2019. According to records filed with ASIC, the company’s Hong Kong-based holding company, provided $160.48m in loans during that year.
Mr Li has a net worth of $3.2bn, according to Forbes, with property developments in 28 cities in China as well as in the US and Malaysia.
The distinctive green-hued building, complete with pool deck and several top floor penthouses, was described by one local “as a big green mothball” because of its lengthy vacancy.
The distinctive green-hued building, complete with pool deck and several top floor penthouses, was described by one local “as a big green mothball” because of its lengthy vacancy.
Locals say despite an initial attempt to sell the apartments in late 2019, the building has been vacant for more than a year. Email and phone inquiries from locals interested in buying apartments have not been answered.
According to property industry sources, R& F did not appoint agents for the sale of the building. It initially had about 10 per cent of the apartments offered for pre-sale but elected not to follow through with the marketing.
A Brisbane City Council spokesman said final certification for the Lotus was granted by a private certifier on September 27, 2019.
“There are no active development applications under assessment for this site and the council is not aware of any reasons for the building not being occupied,” the spokesman said.
The R & F Group caused a stir in the Australian property sector in 2014 when it vowed to buy $500m worth of prime sites across the country. Since then it has developed several large properties, including Brisbane One in South Brisbane.
R & F Mega Property made a profit of $13.7m in the 2019 financial year with its holding company R & F Properties (HK) providing a commitment to provide financial support to the firm to “continue its operations and meet all liabilities.”
The company recognised $148.4m from the settlement of its Brisbane One project in 2019. The company obtained a loan of almost $100m from a property fund management company in April 2020 for a period of two years.
With additional reporting by Chris Herde abd Ben Wilmot
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