Bridgeway Prime Shop Fund puts focus solely on retail

Bridgeway Prime Shop Fund Management has become Hong Kong’s first asset-management firm and collective investment scheme with an exclusive focus on shops and retail outlet investment.

Given the regulatory go-ahead in July last year, it has so far bought seven retail properties worth a combined HK$86.4 million (US$11.1 million).

“We raise funds from our investors after we buy a property rather than before any acquisition,” says Bridgeway founder Edwin Lee. “That way we avoid sitting on cash, and can buy properties even if we are not offering the best price.”

In general, the company holds 40 to 50 per cent equity in its projects, with the rest coming from investors. “We would also consider owning a property outright if we fail to attract interest from investors,” said Lee, who was a New York investment banker before returning to his native Hong Kong in 2001.

When prices were plunging for retail properties, the fund bought its first shop in Jordan in Kowloon for HK$11.78 million. Now the market is picking up, says Centaline Property Agency, with 155 retail shop deals done last month from the yearly low of 56 in July. The total value reached $2.46 billion last month, from $996 million in July.

Uncertainty removed

Bridgeway last week bought two street shops in Yuen Long for a total $19.5 million. Lee says the fund’s seventh deal was sealed just a day after Hong Kong chief executive Leung Chun-ying announced he would not be seeking re-election in March.

“Leung’s decision removed market uncertainty that domestic stamp duty of 15 per cent could be extended to the commercial sector. It should prove positive news, so I decided to buy one more property,” says Lee.

He expects the market in shops that cater to local consumers will become particularly active in the second half of next year. By that time, the new Hong Kong chief executive’s policy on the property market should have been finalised and the city’s tourism industry should be stabilising as well, he says.

Bridgeway paid $10.5 million for its seventh property after the owner dropped the asking price from $12 million. The shop is rented out as a coffee bar at $23,800 a month, an investment yield of 2.3 per cent a year.

Earlier in the week, Lee bought an outlet in Yuen Long for $9.1 million after the vendor slashed the asking price by nearly a quarter. The shop provides an annual yield of 2.4 per cent, with the tenant paying a monthly rent of $18,000.

Bridgeway’s seven shops, bought for between 12 and 32 per cent below asking price, can potentially be subdivided them into 11 smaller outlets for resale.

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