Real estate tycoons "disappeared" in Hong Kong: Xu Jiayin and other nearly 100 billion luxury residential properties were taken over
Tencent News "Periscope" author Luo Fei from Hong Kong
The mainland tycoons who once "spent a lot of money" in Hong Kong have disappeared in the past few years. What followed was the news that their luxury houses and properties in Hong Kong had been taken over by creditors one after another, and they were reduced to silver owners (note: they refer to properties that were repossessed by creditors and then put on the market for sale).
Among them, there are Xu Jiayin of Evergrande Group, Chen Hongtian, the actual controller of Shenzhen Cheung Kei Group and chairman of the Harmony Club, and Pan Sutong, chairman of Goldin Group.
Their assets in Hong Kong include luxury homes located on the Peak and Mid-Levels, office buildings in the core business district, school district housing projects and undeveloped land parcels. Tencent News "Periscope" found that in the past few years, the total value of properties taken over by these mainland tycoons in Hong Kong has been nearly 100 billion Hong Kong dollars.
Around 2016, the spectacular sight of Xu Jiayin's large-scale land grabbing in Hong Kong, beyond the reach of local consortia such as Li Ka-shing, seems like yesterday, but now, some people have lost their freedom, some have disappeared, and many more are still struggling in debt.
They also did not expect that when they borrowed money to buy a house through a large investment bank, the interest rate was less than 2%, and now it has already exceeded 10%.
Sheng Ge returned to the courtyard, and the lights went down the stairs.
Xu Jiayin's mansions and properties in Hong Kong of more than 20 billion yuan have been taken over one after another
The recent news that has attracted much attention in Hong Kong is the ownership of the two mansions C and E on the Peak Buli Trail held by Xu Jiayin. According to Hong Kong's "01 News", the creditors of the two mansions have submitted an application for receivership, which means that the two mansions have in fact become a silver master.
According to public information, Xu Jiayin mortgaged the two mansions to a lending company called ORIX in 2021 to obtain financing after falling into financial difficulties. The market valuation of the two luxury homes is HK$1.7 billion.
This is not the first time that the Hui family has been taken over by creditors in Hong Kong due to debt.
Xu Jiayin owns three villas, B, C and E, in the same location as the Buli Trail on the top of the mountain. In 2021, in addition to the above-mentioned two buildings C and E, around October of that year, the Xu Jiayin family also mortgaged Building B to CCB Asia.
(Xu Jiayin's three villas at 10 Buli Trail.) Image source: Hong Kong "01 News")
In November 2022, Xu Jiayin's villa B in Buri Trail was taken over by CCB Asia. The villa was valued at HK$880 million at the time. CCB Asia will sell the villa in the market by way of tender in early 2023.
Tencent News "Periscope" learned that there were indeed wealthy people in the mainland who were interested in the villa at that time, but this person did not bid in the end. Centaline Real Estate, the real estate agency responsible for the bidding and sales of the villa, once said that there were nearly 10 potential buyers at that time, of which more than 60% were local veteran families, and only 30% were mainland tycoons.
According to the usual silver ownership process in Hong Kong, the two mansions C and E of Buli Trail, which were applied for takeover this time, may not be able to escape the fate of being sold in the end.
A wealthy mainland man looking for a luxury property on the top of a hill in Hong Kong once told Tencent News "Periscope" that he had also paid attention to the luxury house of the Xu Jiayin family, but in the end he did not contact him, because he felt that the market was still overvaluing him.
He told Tencent News "Periscope" that now that the economy is down, Hong Kong's luxury properties do not have much room to rise in the foreseeable future, and even if they are bought, they need to be held for a long time, which is all cost. At the moment, he prefers to buy land that can be converted into an entire home.
In addition to the luxury properties, Hui's headquarters in Hong Kong, the former Evergrande Centre in Wan Chai, was also sold to the public after being taken over by China CITIC Bank in September last year, and was renamed YF Life in June this year. This is an insurance company jointly owned by Jack Ma and Yunfeng Group. Tencent News "Periscope" has not yet learned the final transaction amount of the property. The market values it at about HK$9 billion.
For Hui Ka Yin, among the properties that have been taken over in Hong Kong, the biggest loss is the undeveloped Yuen Long plot. On November 8, 2022, Evergrande Group announced that its undeveloped land in Yuen Long was taken over by creditor Oaktree Capital and sold for US$639 million, equivalent to about HK$5 billion, due to the mortgage involved. Previously, the market valued it at about HK$10.9 billion.
This price made Evergrande Group lose US$770 million, or about HK$6 billion, on the site.
This is equivalent to Oaktree Capital's disposal of Xu Jiayin's assets in Hong Kong in half. Oaktree Capital is the world's largest investor in distressed assets.
Evergrande Group bought the site in 2019 for US$600 million from the Lee Shau Kee family, a local tycoon. At that time, Evergrande Group paid $532 million to convert its farmland properties into commercial land. According to public data, the site has a buildable floor area of about 80,000 square meters.
It can be seen that in the past two years, Hui Ka Yin has become a major asset in Hong Kong, including three luxury houses on the top of the mountain, office buildings in Wan Chai and undeveloped land plots in Yuen Long, totaling about HK$22.48 billion.
Wall Street's "vultures" sold the billionaire Pan Sutong's HK$17 billion school district housing project
This is not the first time Oaktree Capital has been involved in the bank-owned assets of mainland billionaires in Hong Kong.
Oaktree Capital was involved in the disposal of the assets of another wealthy mainland man, Pan Sutong, in Hong Kong. Pan Sutong is the actual controller of Fuda Real Estate, the founder of Songri Group, and the chairman of Goldin Group. He ranked 16th on Forbes' 2019 Hong Kong Rich List and is worth about $5 billion.
In 2022, Pan Sutong pledged the privately held school district housing project in Ho Man Tin, Kowloon, Hong Kong, to Oaktree Capital to obtain a loan of HK$7.5 billion with an annual interest rate of 14%. Local media in Hong Kong reported that according to the contract, if Pan Sutong defaulted, the interest would be increased to 22%.
In fact, Pan Sutong was already in deep financial distress at the time and was desperate for cash flow support – which was his original intention for seeking a loan from Oaktree Capital. In 2017, he obtained a HK$7.2 billion loan from ICBC (Asia) to develop the Ho Man Tin project, and originally planned to recoup the loan after the sale in October 2019, but the sales were not satisfactory that year. Subsequently, in May 2020, Pan Sutong took out a private loan of HK$500 million from another mainland tycoon, Tian Wei.
One month after receiving a HK$7.5 billion loan from Oaktree Capital in 2022, Pan Sutong was asked by Tian Wei to repay HK$811 million in principal and interest in April of the same year. But Pan Sutong was unable to repay.
In July 2022, Pan Sutong was forced to go into bankruptcy and liquidation, and in October of that year, Oaktree Capital took over Pan Sutong's Aowen project. The district's housing market is valued at more than HK$17 billion, the largest property of a wealthy mainland man to be taken over by creditors in recent years, far surpassing Hui Ka Yin's former Evergrande Centre in Wan Chai, which is valued at HK$9 billion.
Subsequently, a number of properties of Pan Sutong were also taken over by creditors, including the former Goldin International Centre in Kowloon Bay, the villa at 75 Deep Water Bay Road, which is next to Li Ka-shing's residence, and the Mansion Residence, a luxury residence in Mid-Levels adjacent to Fung Siu-kong. According to Tencent News "Periscope", Pan Sutong's luxury properties in Hong Kong are worth more than HK$25 billion.
Pan Sutong and Hui Jiayin's assets in Hong Kong are treated in a similar way, i.e. collateral borrowing. The difference is that Xu Jiayin is mortgaged through lending institutions, including the bank CCB Asia, the lending company ORIX, etc.
Pan Sutong borrowed more through acquaintances. He belonged to the earlier wave of mainlanders who went to Hong Kong to make a fortune, and he was familiar with the Li Ka-shing family in his early years. At the beginning of the financial crisis, Pan Sutong once borrowed through the Li Ka-shing family. In 2018, Pan Sutong mortgaged the Goldin Financial Global Centre in Kowloon Bay to the Li Ka-shing family's Cheung Kong Group, obtaining a loan of HK$10.23 billion to repay the bank's debts.
However, there is one thing they have in common, that is, exchanging high-interest short-term debt for long-term debt, and finally pulling all the properties in Hong Kong into the debt abyss.
Shenzhen tycoon Chen Hongtian fell on the road to raising interest rates
In addition to their own factors falling into the quagmire of debt, some rich people fell on the road of drastic changes in the external economic environment because they were "born at the wrong time".
Shenzhen tycoon Chen Hongtian is one such case. Chen Hongtian is the chairman of Cheung Kei Group and the chairman of the Tongxin Club, a well-known private wealthy organization in Shenzhen.
In the rich circle, Chen Hongtian has always been a stable big brother image, and his funds are relatively abundant. In 2017, he followed in the footsteps of his friend Zhang Songqiao and other wealthy people to invest in British real estate.
Zhang Songqiao, a native of Chongqing, is a member of Zhongyu Land (1124. HK), whose business is concentrated in the real estate sector, is very active in Hong Kong's wealthy circle, and was once known as "Chongqing Li Ka-shing".
At the time, Zhang Songqiao's team told Tencent News "Periscope" at the Four Seasons Hotel that they were optimistic about the British rental market, so they were more inclined to buy office buildings.
In the second half of 2017, Dr. Chen bought 20 Canada Square and 5 Churchill Place, two landmark office buildings in Canary Wharf, for a total of 680 million pounds, equivalent to 6 billion yuan. According to market rumors, Chen Hongtian used the two properties as collateral to borrow a large amount of money in the local area.
Canary Wharf, where these two properties are located, is a new CBD area in London that is home to major banks, including HSBC. In the low-interest environment at that time, Dr. Chen's rent could cover the bank's interest.
In the past few years, after the UK has experienced fluctuations such as Brexit, the epidemic, high inflation, and bank interest rate hikes, even Grade A office buildings in London's new CBD area have not been able to withstand the impact of vacancy rates.
Mainland tycoons, including Zhang Songqiao and Chen Hongtian, will have to bear the pain of high interest rates after the epidemic. At this time, the local lending bank began to collect debts from Chen Hongtian.
Tencent News "Periscope" learned that Chen Hongtian was trapped in the loan pressure of British properties, and had to re-mortgage a number of properties in Hong Kong, and finally failed to repay the interest, so that his luxury house and office buildings in Hong Kong were taken over by creditors one after another.
According to incomplete statistics from Tencent News's "Periscope", Chen Hongtian has 8.38 billion Hong Kong dollars of property in Hong Kong that has been turned into a silver owner, including Ao Xuan, a mansion in Mid-levels where he and his family live. This is one of the most expensive properties in Hong Kong, with nearly HK$1 million per square metre when it was transacted in 2015.
Although Chen Hongtian's mansion was valued at HK$680 million in the market, it was finally sold for HK$480 million after being taken over by creditors.
The story of the mainland tycoon's property in Hong Kong becoming the main bank may just be an episode on the road to long-term debt restructuring of these real estate developers, and Chen Hongtian and Xu Jiayin are not the first batch and will not be the last.
The latest news is that Kaiyue, a luxury house in Ap Lei Chau in Hong Kong's southern district held by Logan and KWG, may have a debt situation. There are reports that the Li Ka-shing family tried to buy the property's creditor's rights. Tencent News' "Periscope" has not received comment from the Li Ka-shing family and Kai Yuefang.