ADIA to pay US$1.2 billion for50 % stake in3 Hong Kong hotels

Abu Dhabi Investment Authority، ADIA،  Abu Dhabi’s sovereign wealth fund، has agreed to  pay US$1.2 billion (HK$9.25 billion)، including debt، to buy a 50 % stake in three Hong Kong hotels owned by billionaire Cheng Yu-tung، in the latest Middle Eastern investment in the city through syndicated loan that’s related to the acquisition of three luxury hotels in Hong Kong in 2015  from a group led by New World Development Co Ltd in a HK$18.5 billion ($2.4 billion) deal، the sovereign wealth fund's biggest Asian property investment. 

Bloomberg News Agency reported that Abu Dhabi Investment Authority، ADIA،  Abu Dhabi’s sovereign wealth fund، and New World Development Co. are planning to refinance a HK$9.25 billion ($1.2 billion) syndicated loan that’s related to the acquisition of three luxury hotels in Hong Kong، and banks have been tapped to discuss details for refinancing.

Banks are tapped about the potential refinancing

Abu Dhabi Investment Authority، ADIA،  Abu Dhabi’s sovereign wealth fund، and New World Development Co. are discussing wih banks about the potential refinancing in recent weeks and details of the new loan are still under discussion، said the people with knowledge of the matter، asking not to be identified discussing private matters. 

The Abu Dhabi Investment Authority، ADIA،  Abu Dhabi’s sovereign wealth fund، and New World Development Co. new facility is likely similar in size to the 2015 loan، which was refinanced by New World and Abu Dhabi Investment Authority in 2018 with Renaissance Harbour View Hotel، Hyatt Regency Hong Kong، Tsim Sha Tsui، and Grand Hyatt Hong Kong are the loan’s underlying assets.

The loan was extended by one year، now due in June

The loan of the Abu Dhabi Investment Authority، ADIA،  Abu Dhabi’s sovereign wealth fund، and New World Development Co. was extended by one year in 2023 and is now due in June، but the borrowers have asked for three-year and five-year price quotes، according to one of the people with knowledge of the matter.

The Abu Dhabi Investment Authority، ADIA،  Abu Dhabi’s sovereign wealth fund، is planning to buy the stake of the three luxury hotels in Hong Kong،controlled by the $26 billion family empire of tycoon Henry Cheng، Hong Kong-based as New World Development has been caught in the financial hub’s property-sector slump hitting residential homes to office spaces in China، that  New World Development shares fell to a 21-year low earlier this week amid concerns over its debt leverage، even as the family boosted its stake in the firm but the stock rose 4.2% Thursday.

No comments from New World Development and the Abu Dhabi Investment Authority

New World Development didn’t immediately offer a comment and the Abu Dhabi Investment Authority، ADIA،  Abu Dhabi’s sovereign wealth fund، didn’t immediately reply to a request for comment، although Hong Kong’s ties with Middle Eastern investors have been growing in recent years، inclusing another luxury hotel، Regal Hotels International Holdings، partnered with the Ministry of Investment of Saudi Arabia to build about 100 hotels around the world in a deal worth $5 billion.

Abu Dhabi Investment Authority (ADIA) has agreed to buy   stake in three Hong Kong hotels from a group led by New World Development Co. which will sell 50 % of its interest in the three hotels to a joint venture to be formed by New World and ADIA، the Hong Kong company said in a statement on yesterday.

New World Development Co. has teamed up with ADIA

New World Development Co.، which has long planned an IPO of its hotel properties، has instead teamed up with Abu Dhabi Investment Authority، ADIA،  Abu Dhabi’s sovereign wealth fund، to form a 50-50 joint venture to pursue acquisitions in the hospitality industry، said the Hong Kong company، founded by Hong Kong tycoon Cheng Yu-tung.

New World Development Co. will get HK$10.1 billion from the sale، and plans to use the proceeds to fund its Hong Kong property development projects including the marquee New World Centre Development in Tsim Sha Tsui.

The Abu Dhabi Investment Authority، ADIA،  Abu Dhabi’s sovereign wealth fund، deal marks the second real estate-related investment by a Middle Eastern fund in Hong Kong in the past six months as sovereign wealth funds hunt for stable returns as in October، Qatar Holding paid $616 million for about one fifth of Lifestyle International Holdings.

Adrian Cheng led the negotiations with ADIA

Adrian Cheng، the grandson of founder Cheng of New World Development Co.، personally led the negotiations with ADIA، a person with direct knowledge of the matter told Reuters، declining to be identified as he was not authorised to speak publicly about the matter، however، Chow Tai Folk Enterprise Ltd، a private company owned by Hong Kong's Cheng family، is a minority holder of those hotel assets and will receive about $500 million from the deal.

The Middle East is emerging as a major investor in mainland China and Hong Kong، as the tide of U.S. and European funds recedes that Regal Hotels and its sister property company Cosmopolitan International have signed a memorandum of cooperation with Saudi Arabia to develop hotels in the Middle East in an investment of up to $5 billion to build 50 hotels in the region، of which 30 would be in Saudi Arabia