New World sells 30% stake in Qianhai tower for US$198 million to whittle down debt
- The conglomerate sold a 30 per cent stake in the North tower of the Shenzhen Qianhai Chow Tai Fook Finance Centre to parent Chow Tai Fook Enterprises
New World Development (NWD) has made yet another divestment, this time in an office tower in mainland China, as it continues to whittle down its debt.
The Hong Kong-listed conglomerate controlled by one of the city’s wealthiest families sold a 30 per cent stake in the North tower of the Shenzhen Qianhai Chow Tai Fook Finance Centre to parent Chow Tai Fook Enterprises for 1.44 billion yuan (US$198.2 million), according to an exchange filing late on Wednesday.
The 43-storey grade A office tower, which includes a five-storey shopping centre, has a total gross floor area of 125,600 square metres. The office occupancy rate is 37 per cent and 33 per cent for commercial.
NWD estimated that it will record a gain of about HK$113 million (US$14.5 million) from the transaction, which will enable the company to “realise cash resources in improving the liquidity and strengthening the financial position”, the filing said. The proceeds of the sale will be used as general working capital.
The sale follows a series of strategic moves by NWD to tackle its debt, as both the local and mainland Chinese property markets grapple with persistently low confidence and weak demand.
In April, the company put 18 units in a recently completed grade A office project in Hong Kong’s Kowloon area up for sale amid deteriorating sentiment in the city’s office market, pricing the units from HK$7.2 million to HK$22.7 million, or around HK$12,000 to HK$14,000 per square foot.
In March, NWD sold its shopping centre and parking spaces in Tsuen Wan to rival Hong Kong developer Chinachem Group for HK$4.02 billion.
The conglomerate, controlled by tycoon Henry Cheng Kar-shun of Hong Kong’s third-richest family, said on Monday that it has completed HK$35 billion in new loan arrangements and debt repayments since January.
The moves came after the Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, held its base rate at 5.75 per cent on June 13, in lock step with the US Federal Reserve, which maintained its target rate in the range of 5.25 per cent to 5.5 per cent – its highest level in 23 years.
As of last December, NWD had HK$118.9 billion in consolidated net debt, with a net debt to equity ratio of 49.9 per cent, marking an increase of 2.2 per cent compared with last June, according to its interim results published in February.
NWD has set an ambitious target of reducing its gearing ratio to below 40 per cent by 2027.
The group’s long-term bank loans and other loans and notes payable totalled HK$142.7 billion at the end of last year, declining from HK$170.6 billion at the end of June last year.
Short-term bank and other loans stood at HK$15.2 billion at the end of last year, compared with HK$14.7 billion six months earlier.
