New World gets US$1.2 billion offer for Hong Kong mall

NEW World Development received a US$1.2 billion bid for a Hong Kong shopping mall from a Chinese state-owned company, according to local media Sing Tao. 

CR Longdation, a subsidiary of China Resources Holdings, has offered to buy the K11 Art Mall in Hong Kong’s shopping district of Tsim Sha Tsui, the newspaper said, citing sources. The property generates HK$40 million (S$6.67 million) in rental income a month, said the report. A sale would provide much-needed capital for New World to improve its debt levels, currently the highest among peers. New World and CR Longdation didn’t immediately respond to requests for comment.

“The company might need to sell more non-core assets to reduce debt due to high leverage and borrowing costs,” said Bloomberg Intelligence analyst Patrick Wong, who added that it will lose rental income as a trade-off. The potential transaction could reduce about 4.7 percentage points from its ratio of net debt to shareholders’ equity, to 78 per cent, he estimates.

New World, led by Adrian Cheng, has been offloading its assets to trim leverage the past few years. The company had expected to complete the sale of HK$8 billion of non-core assets by the end of June. BLOOMBERG