New World Development denies rumors of privatization and contact with Blackstone

On August 7, New World Development issued a clarification announcement stating that certain media reports had speculated about a potential privatization offer from its controlling shareholder and Blackstone Group. The company clarified that no discussions regarding such an acquisition proposal had taken place with any parties, including its controlling shareholder or Blackstone Group.

Recently, New World Development has been frequently linked to asset sales.

For instance, in July, reports suggested that the company was in talks with potential buyers to sell its 11SKIES shopping mall at Hong Kong International Airport to improve liquidity. 11SKIES is a large retail, dining, and entertainment complex near the Hong Kong-Zhuhai-Macau Bridge, with a total gross floor area of approximately 380,000 square feet. If completed, the deal could become one of the largest sales of commercial assets at Hong Kong Airport in recent years, with an estimated value exceeding HKD 10 billion.

That same month, market sources also indicated that New World Development was seeking to sell the office portion of its K11 property on Huaihai Road in Shanghai. The building, with a gross floor area of around 81,000 square meters, was reportedly priced at RMB 2.85 billion. Analysts noted that due to weak property markets in Hong Kong and mainland China, the sale price was below the project’s book value.

Reports stated that the current rental rate for the Shanghai K11 office was RMB 9 per square meter, with a gross yield of about 5.8% based on a 63% occupancy rate—higher than mainland China’s implied capitalization rate of 3.6% last year. Despite securing nearly HKD 90 billion in loan refinancing, New World Development continued to seek ways to improve cash flow.

However, the company later denied these reports, stating that claims about the office sale were fabricated by intermediaries and that it was preparing a formal complaint.

These rumors emerged amid New World Development’s strained financial situation. By the end of June 2024, the company reported its first annual loss in nearly two decades. Revenue from continuing operations fell 34% to HKD 35.8 billion, while core operating profit declined 18% to HKD 6.9 billion. Including non-cash losses of HKD 17.5 billion from asset impairments and equity disposals, net losses reached HKD 17.1 billion, with attributable losses nearing HKD 19.7 billion.

The company also failed to meet its debt reduction target, with a debt-to-asset ratio of 49.33%, above its goal of below 40%. Total debt stood at HKD 151.6 billion, including HKD 41.6 billion in short-term debt. Management stated that half of the short-term debt had been addressed and that available funds could cover maturities in the 2025 fiscal year.

However, challenges persisted. In late May, New World Development deferred interest payments on four perpetual bonds totaling USD 3.4 billion, triggering a sell-off in its stocks and bonds. By late June, it secured HKD 88.2 billion in refinancing, with the earliest loan maturity set for June 30, 2028, providing temporary relief.

Market observers suggested that the refinancing was partly driven by lenders’ concerns over systemic risks. Moving forward, New World Development aims to accelerate asset sales to ease financial pressure.

Earlier in March, reports indicated plans to sell HKD 26 billion in assets this fiscal year, including a Grade A office building in Hangzhou valued at approximately RMB 1 billion.