The Sheraton and Four Points by Sheraton Tung Chung are set to change hands (Image: Marriott)
Receivers for Shimao Group have agreed to sell a Sheraton hotel complex near Hong Kong International Airport for HK$2.7 billion ($344 million), 40 percent below the loan balance reported when lenders seized the property in June.
The deal covers the 218-key Sheraton Hong Kong Tung Chung Hotel and the 1,001-room Four Points by Sheraton, the defaulted developer said Thursday in a filing. AlixPartners, the New York-based firm handling the receivership, and hotel operator Marriott identified the buyer to reporters as Oceanfront Hong Kong Ltd, whose owners include investment vehicles associated with Malaysia’s ParkCity Group.
Shimao subsidiary Brand Rise, acting through the receivers, signed two interconditional sale and purchase agreements on Tuesday for the hotels and their businesses. The price may be adjusted, and completion is expected by year-end, subject to conditions.
“This will reduce the overall indebtedness of the group and strengthen its financial position, consistent with the group’s ongoing efforts to address its liabilities in an orderly manner,” Shimao chairman and president Jason Hui said in the filing.
Price Reset
AlixPartners took control of the hotels on 1 June on behalf of lenders led by HSBC, after Shimao failed to find a buyer. The receivers appointed Savills to market the properties through a tender that closed on 31 August, with Shimao describing the bidding as highly competitive.
Shimao founder Hui Wing Mau (Getty Images)
The agreed price is 58 percent below the HK$6.5 billion that Shimao sought in 2023 and 10 percent below the receivers’ reported HK$3 billion target in June. Mingtiandi reported at the time that the outstanding loan balance was HK$4.5 billion.
At 9 Yi Tung Road in Tung Chung, the waterfront complex spans 610,000 square feet (56,671 square metres) and ranks as Hong Kong’s third-largest hotel property by room count, according to Savills. The consideration translates to HK$2.21 million per key, or HK$4,426 per square foot.
ParkCity is a Malaysian developer and investor with projects including Desa ParkCity in Kuala Lumpur and ParkCity Hanoi in Vietnam, as well as retail and hospitality interests. Shimao did not identify Oceanfront’s other investors or disclose their respective stakes.
The Marriott-operated complex recorded blended occupancy of close to 85 percent in the first quarter, Savills said. The Sheraton opened in December 2020 and the Four Points began operating the following month, Shimao’s interim results show.
Savills has promoted potential demand growth from the Airport Authority’s planned Skytopia waterfront development, including a marina and water sports facilities in front of the hotels. The agency also pointed to AsiaWorld-Expo’s second-phase expansion as a source of additional convention and entertainment business.
Secured Lenders First
For holders of Shimao’s restructured offshore debt, the disposal is expected to leave no surplus cash after secured lenders take their share. The hotels are designated assets under the developer’s offshore debt restructuring, which took effect in July 2025, and their sale will constitute a triggering event under the replacement debt instruments.
Shanghai-based Shimao said the proceeds would first repay debt secured against the hotels and that it “does not expect any net cash proceeds from the disposal to be available for deposit into the designated account”. The receivers will use the net proceeds to partially repay the syndicated loan.
The disposal would also remove properties that generated combined hotel revenue of RMB 228 million ($34 million) in the first half, down from RMB 233 million a year earlier. Together, the two hotels accounted for 22 percent of Shimao’s RMB 1.03 billion in hotel revenue during the period.
Shimao had RMB 176.1 billion in borrowings at the end of June, including RMB 98.2 billion that had not been repaid on schedule. Borrowings due within the following 12 months totalled RMB 111.4 billion, against RMB 10.8 billion in cash and bank balances, including restricted funds.
The developer posted a first-half attributable net loss of RMB 6.2 billion on revenue of RMB 11 billion, while contracted sales totalled RMB 8.2 billion. Its interim accounts warned of material uncertainties that could cast significant doubt on its ability to continue as a going concern.
In a deal reported in April, Shimao founder Hui Wing Mau sold six floors at The Center in Central for HK$2.6 billion, or around half his 2017 acquisition cost. Separately, developer Great Eagle acquired the 38th floor of Lippo Centre Tower One in Admiralty, previously used as Shimao’s Hong Kong headquarters, for HK$251 million, more than half below the group’s 2013 purchase price.
