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Edith Lin

Hong Kong’s second-largest public housing builder has secured its biggest syndicated loan at HK$12 billion (US$1.54 billion) to boost cash flow for coming estates amid efforts to sell properties such as shops and an office to finance its projects.
The Housing Society announced the deal with 12 local and international banks on Thursday, with the move following the Urban Renewal Authority’s issuance of HK$12 billion worth of bonds a month ago.
Economists said the loan and the bond issuance reflected the poor state of the real estate market.
The society, which is expected to release its financial report on Friday, said the five-year deal and revolving loan facilities included HK$3 billion to be used on projects to benefit the wider community.
Revolving loan facilities are a type of credit a borrower can draw from and pay back multiple times.
Chairman Walter Chan Kar-lok pledged to make the best use of the money, saying the loan showed the banking sector’s support for the organisation’s development and the city’s future.
“The HK$3 billion social tranche among the loan facilities will fund designated affordable housing projects for people from different walks of lives, creating long-term value for the sustainable development of the community,” he said.
“The loan facilities will be used for bolstering the business development of the Hong Kong Housing Society, particularly the construction of subsidised housing projects.”
The chairman last week said the society had been discussing syndicated loan arrangements, a form of financing offered by a group of lenders, with the process reaching between 80 per cent and 90 per cent completion.
The society has more than 20 projects on its hands to provide over 17,000 public homes in the next five years, including subsidised flats for sale and rental estates.
The HK$3 billion social tranche will be dedicated to redeveloping the Ming Wah Dai Ha rental estate in Shau Kei Wan and building rehousing estates in different districts.
Bank of China (Hong Kong), one of the two coordinating banks, said the “overwhelming response” to the loan showed the society had solid financial strength and a good reputation.
The other 11 lenders include HSBC, the Industrial and Commercial Bank of China (Asia), the Oversea-Chinese Banking Corporation and the Sumitomo Mitsui Banking Corporation.

A source said on Wednesday that the society had put 11 properties up for sale by public tender, including shops and an office.
Nine of the properties are located in North Point, Sheung Wan, Sai Ying Pun, Kennedy Town and Ap Lei Chau, all on Hong Kong Island.
Another two are in Prince Edward in Kowloon and Yuen Long in the New Territories.
Only two of the sites are vacant, while the others are leased to operators of supermarkets, convenience stores, restaurants and a tutorial centre, among others.
The 1,868 sq ft office, located in Kennedy Town, is one of those currently unoccupied.
In a reply to the Post on Wednesday, the society said its financial position remained “robust with a healthy balance sheet”.
“The disposal of the noncore commercial portfolio is part of our strategy to monetise our fixed assets to finance new development projects,” a spokesman said.
The chairman, having revealed his plan to sell non-major property assets in February, said last week that the society would set reserve prices to ensure fair values.
The society is also expected to elect its new chairman on Friday.
Its net deficit increased by 43 per cent in 2022-23 compared with the previous financial year.
The Urban Renewal Authority also recorded a HK$3.9 billion loss in the 2023-24 financial year, of which HK$3.1 billion was related to projects started in the past which could be devalued, while the remaining HK$830 million was an operational deficit.
The authority announced last month that it had an oversubscription rate of about two times for its HK$12 billion issuance of senior bonds, which was well-received by local and overseas investors including banks, asset managers, insurance companies, central banks and official institutions.
Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, said the borrowing arrangements of the two statutory bodies reflected a downturn in the real estate market.
He noted the bodies had significant ongoing projects and expenses, such as private building maintenance projects subsidised by the authority.
“During a sluggish property market, many sectors and even economic activities slow down significantly, putting Hong Kong’s economy in an unideal situation,” Kwan said.
He explained that the two statutory bodies received overwhelming responses as they were backed by the government and posed fewer risks to lenders.
Another economist, Simon Lee Siu-po, also echoed Kwan’s remark and said real estate companies and organisations faced financial issues amid the persistent property market headwinds.
He said cash came in slower as home prices and retail rents fell, while they still had to cover the costs of ongoing projects and operating expenses such as staff salaries.
According to data from the Rating and Valuation Department, the prices of lived-in homes in Hong Kong fell 1.9 per cent in July from the previous month, the lowest level since late 2016.


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Hong Kong’s second-largest public housing builder secures HK$12 billion syndicated loan

Kwun Tong Garden Estate Lotus Towers, a rental estate under the management of the Hong Kong Housing Society. Photo: Jelly Tse

Bank of China, HSBC and OCBC are among the participants of the deal. Photo: Handout

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T-Loft@Kai Tak on Muk On Street. Operated by a local charity, the Tung Wah Group of Hospitals, the four-storey complex has more than 500 flats and houses about 1,500 residents. Photo: Jelly Tse

A photos provided by a resident shows water stains on a doorframe. Photo: SCMP

Water pours into the corridor, forcing residents to block the bottom of their doors. Photo: SCMP

Visible water stains at the bottom of walls, with mildew and fungus growing out of them. Photo: SCMP

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The Housing Society’s outgoing chairman says building on the mainland would require changes to Hong Kong’s current laws. Photo: Martin Chan

Walter Chan, outgoing chairman of the Hong Kong Housing Society, says society will strive to build houses to help resettle residents affected by the Northern Metropolis mega project. Photo: Edith Lin

Hong Kong Housing Society plans to seek bank loan of at least HK$1 billion, sell some assets to tackle cash-flow issues in coming years

The Hong Kong Housing Society is expected to supply 17,000 public flats in the coming five years. Photo: Xiaomei Chen

Housing Society chairman Walter Chan (right) with CEO and executive director James Chan Yum-min. Photo: Edith Lin

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Hong Kong

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Deal includes HK$3 billion for Housing Society to use on projects to benefit wider community, as builder targets increased cash flow


Deal includes HK$3 billion for Housing Society to use on projects to benefit wider community, as builder targets increased cash flow.


Hong Kong economy

Hong Kong property

Urban planning