Banks Consider Seizing Hong Kong's Worfu Mall After Loan Default
The creditors are looking to appoint a receiver for the Worfu mall, formerly known as Provident Square, in Hong Kong's North Point district, said the people, asking not to be identified discussing private matters.
The mall was used as collateral for the about HK$1.5 billion ($190 million) loan that a joint venture owned by a consortium including Schroders Capital and Chelsfield Asia Fund 1 defaulted on earlier this year, the people added. United Overseas Bank Ltd. was the majority lender of the facility.
The joint venture's financial troubles underscore the challenges global investors still face in Hong Kong's beleaguered commercial real estate sector. Weak property values mean that even global asset managers face pressures on investments made during the market's previous highs.
A Schroders spokesperson said the firm is in discussions with banks on managing the assets to deliver the best possible outcome. Chelsfield Asia declined to comment. UOB didn't respond to a request for comment.
Chelsfield Asia Fund 1 teamed up with real estate manager Pamfleet in 2018 to buy the Worfu mall from Hong Kong tycoon Li Ka Shing-backed Fortune REIT. The sale price was HK$2 billion ($255 million), 88% above an appraised value of HK$1.061 billion at the time. Pamfleet was acquired by Schroders Plc. in 2020.
In January, the Schroders-Chelsfield consortium put the mall up for sale by public tender, but no deal was reached.
Another investment property in Schroders Capital's portfolio — The Nate, a serviced apartment tower in Tsim Sha Tsui, the city's bustling tourist district — entered receivership last month, according to land registry records.
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