Hong Kong-based New World Development (NWD) has announced the sale of three hotels to a joint venture with the Abu Dhabi Investment Authority (ADIA) for HK$18.5bn ($2.4bn).
New World’s subsidiaries entered into agreements with ADIA’s wholly-owned subsidiary HIP Company to establish a new joint venture (JV) company.
The JV will own Grand Hyatt Hong Kong, Renaissance Harbour View and Hyatt Regency Tsim Sha Tsui, with effect from the closing of the transaction.
Upon completion of the transaction, the hotels will not be subsidiaries of NWD. Their financial results will be accounted as joint ventures of the group using an equity method of accounting.
In the JV, New World’s unit will own 50%, while the remaining will be owned by ADIA, Bloomberg reported.
Out of the total consideration, NWD will receive HK$10bn ($1.3bn) and use the proceeds for financing its development projects, land bank expansion and other general working capital purposes.
NWD executive vice-chairman Dr Adrian Cheng said: “We are very pleased with this new joint venture and are looking forward to the beginning of what we hope is a long-term relationship and opportunities to do more together with the new partner.
“The transaction offers the best of both worlds for NWD shareholders: 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.”
The transaction is expected to be consistent with NWD’s strategy to properly allocate resources throughout the group. The closing of the transaction is subject to various customary conditions being fulfilled.
Image: Lobby of the Grand Hyatt Hong Kong in 2013. Photo: courtesy of Naiaomdredom.