Hong Kong’s second-largest hotel risks being seized by banks

[HONG KONG] A group of banks are moving to take over a Sheraton-branded hotel property near Hong Kong’s airport, according to people familiar with the matter, after its owner Shimao Group Holdings defaulted on a HK$4.5 billion (S$737 million) loan.

Lenders have been in advanced talks to appoint receivers for the more than 1,200-room property to expedite its sale and recovery of funds, said the people asking not to be identified discussing private matters. Shimao’s units defaulted on the loan late last year, they said. The original lenders to the project included HSBC Holdings, Bank of China (Hong Kong), Bank of East Asia and some others.

Shimao did not immediately respond to a request for comment.

The bid for receivership is part of a broader trend of Hong Kong banks increasingly turning to last-resort measures to clean up a record pile of bad debt. Although the residential market is showing signs of recovery after its deepest downturn in decades, the commercial segment in the financial hub is still grappling with elevated vacancies and oversupply, worsened by distressed asset sales.

The asset up for sale comprises the Sheraton and Four Points by Sheraton Tung Chung and was first put up for sale by Shimao, once one of China’s largest developers. The company failed to find a buyer even after slashing the asking price to about HK$4.5 billion in late 2024 from at least HK$6 billion a year earlier.

The complex, which opened in 2020, is the second-largest in the city by room count, according to real estate agent Jones Lang LaSalle.

Shimao, which was once an investment-grade company and known for developing five-star hotels as landmark projects, first defaulted on offshore debt in July 2022. It secured a court approval for its offshore debt restructuring in March last year.

There have also been other examples of lenders turning to receivership to recover loans.

Bank of China’s Hong Kong unit recently named PricewaterhouseCoopers partners as receivers to find a buyer for HK NEO, a 25-storey office tower in Kowloon, as it sought to recover its share of a HK$5.5 billion syndicated loan, according to documents seen by Bloomberg News.

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Hong Kong housing woes spur HK$10 billion Shimao loan rollover

Hong Kong high court pulls winding-up petition against Shimao

Shimao’s lender UOB seeks private credit deal on HK$10 billion loan

Shimao gets court approval to hold vote on restructuring plan

Shimao cuts asking price for Hong Kong’s second-largest hotel: source

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Bank of East Asia has also appointed EY-Parthenon partners to seize and sell One Bedford Place, an office tower. BLOOMBERG