New World Development (0017) is in discussions to make a payment to terminate its obligations regarding the 11 Skies mall project, a fresh move for the developer in its negotiations with the government, Bloomberg reported.
The payment, which acts as an exit fee, will be used to settle part of New World's long-term lease obligations to the Airport Authority of Hong Kong, the report said, adding that it's unlikely to be paid in cash, with land or other assets expected to be used as payments instead.
There is no agreement being reached between the two parties on the size of the payment, but New Word currently faces massive rental commitments, the report said. The Hong Kong developer needs to pay at least HK$1.8 billion in rent per year between 2028 and 2066, totaling HK$72 billion, according to UBS's estimate.
Besides, the two parties have negotiated several payment options. These include the AAHK receiving land owned by NWD or taking an equity stake in the company, as well as other proposals, such as New World providing free services to the authority or making a cash payment.
The airport authority is now seeking new partners among major Hong Kong developers and global leisure and entertainment operators to take over the mall's operations following New World's exit, according to the report.
