Who can resist some bad news about New World? Drawing on a Bloomberg scoop, Reuters via the Standard reports that…
Blackstone has walked away from a proposed US$4 billion (HK$31.2 billion) tie-up with Hong Kong’s New World Development after the indebted property developer refused to cede control…
…The Cheng family has been in talks with a handful of financial institutions to sell an equity stake in New World, and Blackstone was the most advanced party in the process, Reuters reported in March.
Any investor would have to align their interests with the family and a change of control would be unlikely, they said at the time.
So why did Blackstone get this far in the negotiations? As for New World – was losing control just too much loss of face, or were they panic-stricken by the reality that someone bailing them out might expect to call the shots?
The Chengs are now scrabbling around trying to sell off choice family jewels, like Rosewood Hotels and the weird-smelling K11 Nausea mall. Apparently other investors – presumably with a greater appreciation of the wondrousness of the Cheng gene pool – are thinking of getting involved.
Meanwhile, the Airport Authority is reportedly taking over the retail space at 11 Skies…
…with the mall’s positioning to be aligned with the overall development of SKYTOPIA to create synergies…
Synergy by SKYTOPIA. Sounds like a synth-laden 70s prog rock album.
New World won the design, build and operate contract for the project in 2018, with a total investment exceeding HK$20 billion. Under the existing agreement, New World is required to pay the Airport Authority an annual guaranteed rent of HK$1.8 billion from 2028 to 2066, or up to 30 percent of the project’s annual gross revenue, whichever is higher. The huge investment in 11 SKIES has been cited as partly responsible for New World’s debt crisis.
…The 11 SKIES project, located near Terminal 2, was originally designed to accommodate more than 800 shops and would become Hong Kong’s largest shopping mall upon opening. However, most storefronts are currently boarded up, with only two restaurants operating.
Sounds like a 0.25% occupancy rate. The boy Adrian, who masterminded 11 Skies, was last heard of a few months ago planning a mega-retail project in… Dubai. Talk about timing.
There was a time when Beijing might have arranged some help for a local tycoon in distress. But that was several decades ago. Hong Kong developers are of no further use now. Meanwhile, the Mainland’s developers have surpassed Hong Kong’s in vision and growth. Evergrande’s debt, for example, is probably 10-15 times bigger than New World’s.
At least Kai Tak Sports Park is a huge success
‘…originally designed to accommodate more than 800 shops…’
Who is ever going to need them? Everyone* buys online and has stuff delivered? Likewise, who will need the ‘premium retail space focused on international and Asian brands’ that will be at Central Yards when it opens?
– Whatever – there will be plenty of space for Claw machines
The inappropriatly named Central Yards underlines the band wagon mentality of our developers.
Obviously copied from Hudson Yards, a missive development on Manhattan’s West Side.
That has been built on a platform over existing railway yard so has an historical identity.
Central Waterfront is reclaimed land and Yards conjures up visions of smutted industrial infrastructure rather than an upmarket retail/commercial node.
But perhaps the intention is to make anchor tenant New York quant trader Jane Street feel athome?
This aged well:
https://www.mehongkong.com/eng/home/mice-ideas/detail/New-Retailtainment-Tourism-Landmark-11skies.html
More shops. Heap good. More roads. More heap good.
Adrian heap shit for brains.
You do have to wonder how badly inbred the Cheng nepo-babies are that any of them thought “being right next to the airport” coupled with “shit tourist cinema gimmick” and “kid’s games arcade” were going to be huge money-spinning USPs for a yet-another-very-un-unique-shopping-mall to the point that it was worth pissing away HK$20 billion (almost their entire US$3bn market value) on it.
Central Yards has the same flavour of up-market slumming as Victoria Dockside on t’other side of the water.
Yes, airports are usually places NO ONE really wants to hang out in for more than the requisite time to get on or off your plane.
But that is apparently the trend: airport as a “destination” to actually spend time and, in some cases, you don’t even actually have a flight to catch!
How does the loss of decades of guaranteed rent — at a minimum of HK$1.8 billion per year — affect the Airport Authority’s ability to service its debt?