Evergrande’s Hong Kong HQ Attracts Many Potential Buyers
HONG KONG – Savills, which is managing the sale of Evergrande Group’s office tower in Wan Chai district, revealed that the commercial property has attracted the interest of dozens of would-be buyers, including local developers, family offices, and mainland Chinese financial companies, reported Reuters on Friday (21 October, SGT).
According to Savills Hong Kong’s Deputy Senior Director Godfrey Cheng, the names of the potential buyers in the latest attempt to dispose the office building are not immediately known, with many of them having inked non-disclosure agreements (NDA).
The deadline for submission of final bids for Evergrande’s office property closes at the end of this month. And the forced divestment is occurring amidst a sluggish office market in Hong Kong, where selling prices have slumped over the last 3 years.
But after a weak response in an earlier round of bidding this year, it’s unclear how many would-be buyers would submit final offers for the commercial property.
In late-2021, a potential US$1.7 billion transaction to sell the office tower was scrapped. Then in the July 2022 tender, there were only two bids, and they were lower than HK$10 billion and the HK$12.5 billion acquisition price of the commercial property in 2015.
Savills’s Cheng revealed that Evergrande Hong Kong headquarters is now valued from HK$8 billion (US$1.02 billion) to (S$1.15 billion) HK$9 billion. This means, once the office building is sold, very little would be left for Evergrande creditors, who are owed US$22.5 billion worth offshore debt by the real estate developer.
This is because the office building has been pledged as a collateral and the proceeds from the sale will be used to pay first a HK$7.6 billion loan from lenders led by the Hong Kong unit of Chinese state-owned China Citic Bank. Overall, Evergrande Group has a debt of over US$300 billion.