Shimao Group faces hotel seizure after HK$4.5B loan default

A banking syndicate is preparing to seize Shimao Group's 1,200-room hotel complex near Hong Kong International Airport after the developer defaulted on a HK$4.5 billion loan, marking one of the largest distressed asset actions in the city's commercial property downturn.

A group of lenders led by HSBC Holdings, Bank of China (Hong Kong) and Bank of East Asia is in advanced discussions to appoint receivers for the Sheraton Hong Kong Tung Chung Hotel and Four Points by Sheraton Hong Kong, Tung Chung, according to people familiar with the matter. The move would accelerate the sale of the property — Hong Kong's second-largest hotel by room count, according to Jones Lang LaSalle — and allow the banks to recover funds after Shimao stopped servicing the debt late last year.

"The receivership reflects lenders' growing impatience with a distressed asset that has failed to attract buyers despite aggressive price cuts," said Hannah Park, a credit analyst covering Asian real estate. "Banks are choosing to take control rather than wait indefinitely for a market recovery."

Shimao first listed the twin-tower complex for sale in late 2024 with an asking price of at least HK$6 billion, then slashed it to about HK$4.5 billion by year-end — a 25 percent reduction — yet found no takers. The property opened in 2020 and comprises more than 1,200 rooms across two brands under Marriott International. The original lenders also included other banks beyond the three named, though the full syndicate composition has not been disclosed.

The seizure push is part of a broader clean-up of bad loans across Hong Kong's commercial property sector, where high vacancy rates and oversupply persist even as the residential market shows early signs of recovery after its deepest downturn in decades. Bank of China recently appointed PwC partners to take control of the Kowloon office tower HK NEO, while Bank of East Asia engaged EY-Parthenon to seize One Bedford Place. These actions show lenders are increasingly resorting to receivership — a last-resort measure — to dispose of distressed assets and reduce a record pile of non-performing loans.

For Hui Wing Mau, the 75-year-old billionaire who controls Shimao, the hotel seizure represents another blow to a once-vast property empire. His net worth peaked at $10.3 billion in 2021, according to Forbes, but has since plunged to $1.9 billion as the developer's debt crisis forced a series of discounted asset sales, including floors in Hong Kong's The Center, the former Lippo Centre headquarters and overseas properties. Shimao, once an investment-grade company known for developing five-star hotels as landmark projects, first defaulted on its offshore debt in July 2022 and obtained court approval for its restructuring in March last year.

Shimao's Hong Kong-listed shares fell 3.96 percent to HK$0.097 on the news, trading near 52-week lows. The stock has collapsed 86.7 percent over the past year, with the company's debt-to-equity ratio standing at negative 1,092 — reflecting severe balance sheet strain. The hotel seizure signals further asset write-downs ahead as lenders force disposals to recover capital, and the broader commercial property sector faces continued pressure from elevated vacancies and subdued transaction volumes.

This article is for informational purposes only and does not constitute investment advice.