Evergrande’s HK Headquarters Seized By Creditor

HONG KONG – Four sources revealed that the local headquarters of Evergrande has been taken over by a creditor after the indebted Chinese developer twice failed to sell the commercial property and defaulted on a loan, reported The Financial Times on Thursday evening (8 September, SGT).

At present, the office building is valued at US$1.2 billion. Evergrande has twice tried to divest the asset. In October 2021, Chinese government-owned Yuexiu Property walked away from a US$1.7 billion transaction to acquire the office building because of concerns regarding the developer’s financial status.

Evergrande’s Hong Kong headquarters re-entered the market in July 2022, piquing the interest of several bidders, including CK Asset Holdings, the Hong Kong-based real estate developer controlled by billionaire Li Ka-shing. However, a source with knowledge of the tender process disclosed that a sale didn’t materialise due to the low offers received.

The sources shared that the creditor had informed Evergrande earlier this week that it had hired a receiver to seize Evergrande’s Hong Kong headquarters and compulsorily dispose the asset. They said the 26-storey commercial property was used as a collateral for some loans, which gives the creditor the power to take control of it if Evergrande fails to repay its loans.

One of the sources said Evergrande had used the office building as collateral for loans from a consortium of lenders led by China Citic Bank International, the Hong Kong unit of the Chinese state-owned bank.

In September 2021, as Evergrande was on the verge of defaulting on its debt obligations, Citic Bank informed its investors that the loans it granted to Evergrande were backed by precious property, although it did not provide more information.