Hong Kong’s New World Development denies sale of K11 Atelier stake, citing ‘robust cash reserves’
- The company has US$13.4 billion in capital and ‘no plans to sell any stake in K11 Atelier King’s Road’
- The developer, owned by the family of billionaire Henry Cheng Kar-shun, issued a statement following a published report
New World “has no plans to sell any stake in K11 Atelier King’s Road”, it said in a statement issued after a Reuters report said it was in talks to sell most of its stake in the HK$11 billion office tower, which is located in Hong Kong Island’s North Point district.
The company, owned by the family of billionaire Henry Cheng Kar-shun, has no plans to sell any other K11 properties either, the statement added.
“We are in a very strong liquidity position with robust cash reserves,” the statement said, adding that as of June 30, 2022, New World held HK$62.2 billion in cash and bank balances and HK$42.8 billion in undrawn loan facilities.
“These funds are more than sufficient to allow us to seek new investment opportunities and create long-term value for the group as we expand in the Greater Bay Area,” a spokesperson said, adding that the company made a tender offer in December to buy back bonds and perpetual notes amounting to HK$6.5 billion, backed by its cash reserves.
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New World’s shares rose 1 per cent on Thursday to HK$24.15.
Net gearing for the company in the 2022 financial year stood at 43.2 per cent, its financial report showed, making New World one of the most indebted developers in the city. Its peers average about 20 per cent.
With floating debt of HK$123 billion, every 100-basis-point increase in interest rates raises New World’s cash interest expenses by HK$1.2 billion, Morgan Stanley wrote in a research note in October.
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On Thursday morning, the Hong Kong Monetary Authority announced it was raising its benchmark interest rate by 25 basis points to a 15-year-high of 5 per cent, following the Federal Reserve’s identical increase. The city’s largest commercial banks, HSBC and Hang Seng Bank, opted to keep their prime lending rates steady at 5.625 per cent.
New World plans to allocate HK$25 billion over the next two years to investments in the Greater Bay Area, the company said in September.
