**Bank Creditors Eye Control of Hong Kong Shopping Center Amid Loan Default**
Bank creditors are contemplating taking control of a shopping center in Hong Kong after a joint venture, supported by Schroders Capital and Chelsfield’s Asia fund, defaulted on a loan associated with the property. Sources familiar with the situation, who requested anonymity, revealed that creditors are seeking to appoint a receiver for the Worfu mall, previously known as Provident Square, located in the North Point district of Hong Kong.
The mall served as collateral for a loan of approximately HK$1.5 billion (around $190 million) that the joint venture, which includes Schroders Capital and Chelsfield Asia Fund 1, failed to repay earlier this year. United Overseas Bank Ltd. was the primary lender for this facility. The financial difficulties faced by the joint venture highlight the ongoing challenges that global investors encounter in Hong Kong’s struggling commercial real estate market. Diminished property values are exerting pressure on investments made during the market’s peak periods, even affecting major asset managers.
A spokesperson for Schroders stated that the firm is in discussions with banks to manage the assets effectively and achieve the best possible outcome. Chelsfield Asia declined to provide comments, and United Overseas Bank did not respond to requests for information.
In 2018, Chelsfield Asia Fund 1 partnered with real estate manager Pamfleet to acquire the Worfu mall from Fortune REIT, which is backed by Hong Kong tycoon Li Ka Shing. The acquisition price was HK$2 billion ($255 million), significantly higher than the appraised value of HK$1.061 billion at that time. Pamfleet was later acquired by Schroders Plc. in 2020. Earlier this year, the Schroders-Chelsfield consortium attempted to sell the mall through a public tender, but no agreement was reached.
Additionally, another property in Schroders Capital’s portfolio, The Nate, a serviced apartment tower located in Tsim Sha Tsui, entered receivership last month, as indicated by land registry records.
**FAQ**
**What led to the default on the loan for the Worfu mall?**
The default was primarily due to ongoing challenges in Hong Kong’s commercial real estate sector, which has seen declining property values, impacting the financial stability of the joint venture involved.
