Chinese developer Shimao’s lender seeks private credit deal on US$1.3 billion loan

The loan, which matures on September 30, is backed by a complex in Hong Kong’s Kowloon Tong neighbourhood

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The Beacon Peak project by Chinese developer Shimao in Kowloon Tong, Hong Kong. Photo: Undated handout

Published: 4:29pm, 23 Jan 2025

A Shimao Group Holdings lender is in talks with private credit investors in hopes of offloading a HK$10 billion (US$1.3 billion) loan due this year tied to a luxury Hong Kong residential complex that is key to the defaulted Chinese developer’s restructuring, according to people familiar with the matter.

Singapore-based United Overseas Bank (UOB) has reached out to such investors in recent weeks for a deal regarding the loan, they said. The loan, taken out by Shimao in 2022, matures on September 30. It is backed by the Beacon Peak complex, located in Hong Kong’s Kowloon Tong neighbourhood.

The builder, which is looking to unload assets to pay back creditors, put 13 units of the complex up for sale this month, according to sales documents. It has sold three of them as of January 18 at prices ranging from HK$28 million to HK$37 million, records showed.

That is still far short of the loan principal, and the sales pace underscores Shimao’s challenges in trying to raise cash quickly in Hong Kong’s weak and discounted property market. The involvement of private credit investors could further complicate an ongoing debt-restructuring process, as their business model often operates on seizing borrowers’ assets when they default.

“Shimao may struggle to achieve a high sell-through rate at its new Beacon Peak project in Kowloon, given its distance from transport links,” Bloomberg Intelligence analysts Kristy Hung and Monica Si wrote in a note.

Shimao did not immediately reply to a request for comment. UOB did not respond to emails seeking comment, and phone calls were not answered.