Hong Kong developer secures extension for HK$2.4 billion loan related to Kai Tak project
HNA Group says extension ‘does not indicate that we have financing problems’
Chinese conglomerate HNA Group has secured a six-month extension for a HK$2.4 billion (US$306.75 million) bridging loan related to its residential project at the site of Hong Kong’s old airport.
Hong Kong International Investment Group, formerly known as HNA Holding International Investment Group, announced the extension before the loan was to be repaid on Monday. It won the site, New Kowloon Inland Lot 6562, for HK$5.41 billion, or HK$13,600 per square foot, in December 2016.
“Since extra time is needed to complete the arrangement of the development loan in relation to the 6562 land parcel, the bridging loan is extended for six months to July 15, 2018,” the company said on Monday.
“The extension does not indicate that we have financing problems. We have repaid more than HK$300 million out of the overall bridging loan, which is in the size of about HK$2.4 billion,” said a spokesman.
“Due to Christmas and new year holidays, we do not have enough time to arrange the development loan. That’s why we extend the bridging loan,” he added.
Vincent Cheung, the deputy managing director of global commercial real estate company Colliers International, said the extension for a revolving loan would be between six months and one year.
“With the land as collateral, banks will see less risk in extension of the loan. Land prices have surged sharply since 2016,” he said.
The group is unlikely to default on the loan
He said the land value for Lot 6562 had increased by about 25 per cent to HK$17,000 per square foot.
“The group will make a profit if it sells the lot. The group is unlikely to default on the loan,” he added.
Last week, it was reportedly that the group was in talks with Sun Hung Kai Properties for a loan to refinance its repayment liabilities linked to a site it bought in the Kai Tak area, according to Reuters.
Hong Kong International Investment emphasised it has sufficient capital for the development in Kai Tak.
“We would like to stress again that we have planned meticulously on all aspects of the development and funding of the project, and the company has a good relationship with the bankers. We can speak with confidence that we have secured sufficient capital to support development of this project and the project will proceed smoothly as planned,” the company said.
The group paid a total of HK$27.2 billion for four parcels of land, which were acquired over four months starting in November 2016.
