UPDATE 1: New World Development Looks to Monetize Interest In 4 Hong Kong Hotels, Shenzhen K11 ECOAST; Targets CNY 3B From Mainland Asset Disposals In FY’25

Tue Oct 22, 2024 04:45 AM ET: As part of ongoing efforts to offload non-core assets, Hong Kong-listed developer New World Development is looking to monetize its interest in four Hong Kong hotels, according to a source who had seen a deck for the sale of interest in a portfolio of hotels, and a source briefed on the contents of another deck for the sale of interest in a hotel in Hong Kong’s New Territories.

New World is also eyeing the disposal of its interest in the yet-to-open Shenzhen K11 project, said a third source briefed by parties involved in discussions around the project.

The four five-star Hong Kong hotels include three hotels – the Grand Hyatt Hong Kong, the Renaissance Harbour View and the Hyatt Regency Tsim Sha Tsui – owned by a 50:50 JV between units of New World and the Abu Dhabi Investment Authority, or ADIA, according to the first two sources.

The fourth hotel, the Hyatt Regency Sha Tin, was jointly built by New World and the Chinese University of Hong Kong. The hotel’s gross floor area attributable to New World equals its total GFA, according to New World’s 2023 annual report.

New World is planning to sell as a portfolio the three hotels in the JV with ADIA, one of the first two sources said. The company said in a June investor newsletter that it had completed the refinancing of an originally HKD 9.25 billion ($1.191 billion) loan backing the three hotels jointly owned with ADIA, with additional new money of HKD 260 million.

Meanwhile, New World has been in talks to sell its K11 Art Mall in Hong Kong’s Tsim Sha Tsui district to Chinese conglomerate China Resources (Holdings) Co. Ltd.’s property management arm China Resources Longdation Ltd., according to a fourth source familiar. China Resources Longdation initially offered to buy the K11 Art Mall for HKD 9 billion earlier in the summer, but the fourth source familiar said China Resources has since engaged a third-party advisor to perform an independent valuation analysis on the property, and is looking to acquire the mall at a lowered price.

In Shenzhen, the local government has been coordinating a sale of New World’s stake in the K11 ECOAST, a 51:49 JV project with state-owned China Merchants Shekou Industrial Zone Holdings, according to the third source familiar.

New World said in its Sept. 27 earnings call that the K11 ECOAST was slated to open at the end of 2024, but the company subsequently told investors on an Oct. 16 call that the opening of the Shenzhen mall was postponed to mid-2025, according to fourth and fifth source who attended the Oct. 16 call. On both calls, New World management guided a pre-leasing rate of just over 50% for the K11 ECOAST, the same two sources said.

Situated in Prince Bay in the Nanshan District, Shenzhen and spanning a total GFA of nearly 230,000 square meters, the K11 ECOAST is New World’s first flagship K11 project in mainland China. The project comprises the cultural retail landmark K11 ECOAST, the multi-purpose cultural space K11 Cultural Centre, the modern office space K11 ATELIER office building, and the bayfront Promenade, according to New World’s 2024 annual results.

New World said on the Sept. 27 earnings call that it plans to achieve HKD 13 billion in non-core asset disposals for the fiscal year starting July 1, 2024 and has already completed HKD 3.8 billion between July and September.

During the Oct. 16 call, NWD management said that it aims to dispose of around CNY 3 billion of non-core assets in mainland China in FY’25, according to the fourth and fifth source who attended. In other calls held between September and October, the company also said it aims to achieve CNY 8 billion in contracted sales in mainland China for FY‘25, bringing the total onshore sales target to CNY 11 billion for the fiscal year, said the same sources who also attended these calls.

New World Development and China Resources Longdation did not respond to requests for comment as of press time.

BREAKING: New World Development Looks to Monetize Ownership In 4 HK Hotels, Shenzhen K11 ECOAST; In Talks With China Resources to Sell K11 Art Mall

Hong Kong-listed developer New World Development is looking to monetize its ownership in four five-star hotels in Hong Kong, including the Grand Hyatt Hong Kong, the Renaissance Harbour View, the Hyatt Regency Tsim Sha Tsui, and the Hyatt Regency Sha Tin, as well as its K11 ECOAST project in Shenzhen, according to three sources familiar with the matter.

The company is also in talks with China Resources Longdation Ltd. to sell its K11 Art Mall in Tsim Sha Tsui, according to a fourth source familiar. China Resources Longdation has engaged a third-party advisory to perform an independent valuation analysis on the commercial property, and is looking to acquire the mall lower than its initial HKD 9 billion offer.

Three of the Hong Kong hotels – the Grand Hyatt, Renaissance Harbour View and Hyatt Regency Tsim Sha Tsui – are held in a 50:50 joint venture partnership between units of New World Development and Abu Dhabi Investment Authority, or ADIA, via a 2015 deal, as reported.

New World Development did not respond to requests for comment as of press time.