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Hong Kong developer Lai Sun seeks note swap in bid to ease liquidity pressure

Noteholders, if eligible, can swap their holdings for notes in US dollar denominations

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A view of the CCB Tower in Central. Photo: Nora Tam
Cheryl Arcibal
Hong Kong developer Lai Sun Development, chaired by businessman Peter Lam Kin-ngok, who also chairs the city’s Tourism Board, has launched an exchange offer for its outstanding US$493 million worth of 5 per cent guaranteed notes due July 2026, in an effort to relieve short-term liquidity pressures, the company said Monday in a filing to the Hong Kong stock exchange.

Eligible noteholders can swap their existing holdings for new, US dollar-denominated senior guaranteed notes carrying an 8 per cent annual coupon with a three-year tenor.

While the residential property market has shown signs of recovery, commercial real estate markets in Hong Kong and mainland China remain challenging. Continued downward pressure on market valuations and negative rental reversions remain.
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As of April, overall vacancy rates in Hong Kong’s premium office spaces stood at 13.5 per cent, unchanged from March, according to data tracked by JLL. While four other core office areas saw an uptick in empty spaces, Central’s vacancy rate declined to 9.2 per cent from 9.6 per cent, data showed.

“These adverse market conditions have materially and negatively affected the group’s business, operating results and financial and liquidity position,” the developer said in the filing.

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The group’s portfolio includes office, retail and hospitality projects in Shanghai and Guangzhou, Zhongshan and Hengqin in Guangdong province. In Hong Kong, it owns commercial and office buildings including Causeway Bay Plaza 2 and Cheung Sha Wan Plaza, as well as a 50 per cent interest in the China Construction Bank (CCB) Tower in Central.

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