Gaw Capital in talks to resolve HK towers loan as maturity looms

Hong Kong-based investment firm Gaw Capital Partners is in discussions with lenders to find a resolution for a soon-to-mature loan backing two office buildings.

A HK$10.3 billion loan backing Cityplaza Three and Cityplaza Four, in which Gaw Capital owns a stake of around 65 percent, is set to mature in early April, according to people familiar with the matter, who asked not be identified discussing private matters.

The real estate fund manager is in talks with banks on various options, which include refinancing or partially paying down the loan’s principal, but a consensus hasn’t yet been reached, the people said. If all fails, the facility’s tenor could be extended upon maturity, the people added.

BNP Paribas, Hang Seng Bank (0011), Standard Chartered (2888) and United Overseas Bank Ltd. are among the largest lenders of the loan, which has been in the spotlight since mid-2024. Rental income generated from the assets had been insufficient in meeting the facility’s full interest payments as high vacancy levels and elevated rates continue to plague Hong Kong’s property sector.

BNP Paribas, Gaw Capital, Hang Seng and StanChart declined to comment, while UOB didn’t respond to requests for comment.

Gaw Capital had sought to take full ownership of the office buildings from minority stake partner Hengli Investments, but was unsuccessful. Hengli hadn’t been paying interest on the loan since late 2023, prompting Gaw Capital to cover the shortfall with its own funds.

Gaw Capital reassured lenders late last month that it has the ability to service the interest payments on the loan, including the portion owned by Hengli, for the next 12 months, said one of the people.

Cityplaza One, another office tower owned by an investor group led by Gaw Capital, refinanced a HK$5.4 billion loan at the end of 2024. The syndication process for the facility, which began late last year, is still ongoing, according to people familiar with the matter.

Bloomberg