One of Hong Kong’s biggest property developers is in talks to refinance billions of dollars in bank loans following years of ambitious debt-fuelled expansion, adding to pressures in the Chinese territory’s struggling real estate market.
New World Development borrowed money for projects that people inside and outside the company have characterised as “aggressive”. They include a HK$20bn (US$2.6bn) retail and office space near Hong Kong’s airport and several mainland Chinese developments, including a $1.3bn mixed-use complex in Shenzhen.
This week the company said it was “actively engaged with its creditors in relation to the refinancing of its existing loans”. It is also under pressure to repay bondholders, with net debt at HK$124.6bn as of the end of last year. Interest expenses exceeded operating profits in the second half of last year, a sign of financial distress.