New World sells 30% stake in Qianhai tower for US$198 million to whittle down debt

New World Development (NWD) has made yet another divestment, this time in an office tower in mainland China, as it continues to whittle down its debt.

The Hong Kong-listed conglomerate controlled by one of the city’s wealthiest families sold a 30 per cent stake in the North tower of the Shenzhen Qianhai Chow Tai Fook Finance Centre to parent Chow Tai Fook Enterprises for 1.44 billion yuan (US$198.2 million), according to an exchange filing late on Wednesday.

The 43-storey grade A office tower, which includes a five-storey shopping centre, has a total gross floor area of 125,600 square metres. The office occupancy rate is 37 per cent and 33 per cent for commercial.

NWD estimated that it will record a gain of about HK$113 million (US$14.5 million) from the transaction, which will enable the company to “realise cash resources in improving the liquidity and strengthening the financial position”, the filing said. The proceeds of the sale will be used as general working capital.

The sale follows a series of strategic moves by NWD to tackle its debt, as both the local and mainland Chinese property markets grapple with persistently low confidence and weak demand.

In April, the company put 18 units in a recently completed grade A office project in Hong Kong’s Kowloon area up for sale amid deteriorating sentiment in the city’s office market, pricing the units from HK$7.2 million to HK$22.7 million, or around HK$12,000 to HK$14,000 per square foot.