New World is selling China property assets after loan deal: sources
The developer is said to favour buyers such as investment funds or private firms that can make swift decisions and offer faster cash recovery
[HONG KONG] New World Development is seeking to divest real estate projects in mainland China after pulling off an US$11 billion refinancing deal in June, according to people familiar with the matter.
The Hong Kong developer is planning to sell property assets in China piecemeal, including landmarks like its K11 buildings in Hangzhou, Shenzhen and Shanghai, the people added, asking not to be named because the matter is private.
New World is expediting asset sales as part of its deal to secure its June loan refinancing agreement with banks, the people explained.
The company favours buyers such as investment funds or private firms that can make swift decisions and offer faster cash recovery, one of them said.
The developer remains in the spotlight as it continues to face liquidity stress and is seeking to raise as much as US$2 billion through a new loan that would be backed by its crown jewel asset, Victoria Dockside in Hong Kong.
The firm set a commitment deadline for Jul 11, Bloomberg previously reported. It is common for borrowers to extend such deadlines for various reasons in the syndicated loan market.
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“The prior refinancing has only eased the liquidity strains but not reduced overall debt balance,” said Jeff Zhang, an analyst with Morningstar. “Finding buyers with reasonable valuation may take long durations.”
New World had HK$50 billion (S$8.2 billion) in completed investment properties in mainland China as of Dec 31, according to Bloomberg Intelligence. Its prospects for selling the assets are clouded by the country’s ongoing real estate downturn and slowing economy.
In Shanghai, the company is seeking 2.85 billion yuan (S$508 million) for its K11 tower, according to a property agent brochure. New World did not respond to an emailed query.
Controlled by the family empire of Hong Kong tycoon Henry Cheng, New World has one of the highest debt burdens of any big developer in the city. Its net debt reached 95.5 per cent of shareholders’ equity as of December, according to Bloomberg Intelligence.
The funding environment for troubled and small Hong Kong developers has become increasingly challenging given that property prices in the city are now around a nine-year low. Banks are demanding stricter refinancing terms and asking for more credit enhancements.
New World had been exploring other options earlier in the year, including holding talks with Chinese state-owned firms about a potential full sale of the company, according to other people familiar with the matter.
The Cheng clan, worth an estimated US$21 billion as of March, proposed a semi-bailout to New World about two years ago, when it offered to take a subsidiary private and give the developer about HK$21.7 billion. The firm reported its first annual loss in 20 years for the 12 months ended June 2024.
Adrian Cheng, the eldest son of the family’s patriarch Henry Cheng, stepped down as chief executive officer soon after that, and this month he left the board. The Cheng family also owns a stake in Chow Tai Fook Jewellery Group Adrian Cheng’s siblings include Sonia Cheng, who looks after the Rosewood Hotel.
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