Hong Kong real estate fund stumbles as trade war, coronavirus tip Shanghai commercial property into bear market
- Two of Phoenix Property’s funds have a November deadline to repay loans used to part finance Shanghai office tower deals
- ‘This is just a short-term crisis,’ co-founder Samuel Chu says
Phoenix Property Investors, a US$7.7 billion real estate fund, has six months to save itself from potential cascading defaults in two commercial property bets in China after the market cracked, banks trimmed lending and co-investors balked at a restructuring proposal.
The transactions, worth almost 4 billion yuan (US$562 million), hinge on repaying two offshore bridging loans maturing in November used to pay for part of the costs, according to a document seen by the South China Morning Post. “We cannot refinance,” it warned.
Unable to close the transactions, Phoenix considered cutting its losses or finding new buyers for the assets in a proposal last month. Investors balked at the prospect of sinking more capital or offloading the assets at depressed prices, at least according to one stock exchange filing.