Abu Dhabi Investment Authority (ADIA) has agreed to buy three Hong Kong hotels from a group led by New World Development Co in a $2.4 billion deal, reportedly the sovereign wealth fund's biggest Asian property investment. The hotels involved are the Grand Hyatt Hong Kong, Renaissance Harbour View and Hyatt Regency Hong Kong.
New World Development is controlled by the family of Hong Kong billionaire Cheng Yu-tung. The developer will receive HK$10 billion in cash for the sale, it said in a statement to the Hong Kong stock exchange. A unit of New World will hold 50 percent of the venture, with Abu Dhabi Investment owning the rest, it said.
The sale follows New World’s previous attempt to spin off the three hotels in a Hong Kong share sale in 2013, which sought to raise as much as $1 billion and was aborted because of market volatility, people with knowledge of the matter said at the time. The proceeds from the new deal will be used for its development projects, expanding its inventory of land, and working capital, the company said.
“The company wants to actively buy land but doesn’t want to increase its gearing,” said Joyce Kwock, an analyst at Credit Suisse Group AG. The sale “makes sense as hotel operations have gotten more difficult,” she said.
“We continue to retain long-term interests in these prime hotel assets in Hong Kong whilst at the same time recycling capital to pursue other value-enhancing investments,” New World Vice Chairman Adrian Cheng said in the statement Thursday.