Lai Sun Development seeks note swap to ease liquidity pressure

Key facts

• Lai Sun Development is offering to exchange its US$493 million in 5% guaranteed notes due 2026.
• The exchange offer aims to provide liquidity relief for the company.
• New notes will carry an 8% annual coupon and have a three-year tenor.
• Challenging commercial real estate markets in Hong Kong and mainland China are impacting the company.
• Overall vacancy rates in Hong Kong's premium office spaces were 13.5% as of April.

Hong Kong developer Lai Sun Development, chaired by Peter Lam Kin-ngok, has initiated an exchange offer for its US$493 million in 5% guaranteed notes due in 2026. The move is intended to alleviate short-term liquidity pressures faced by the company. Eligible noteholders are offered the chance to swap their current holdings for new, U.S. dollar-denominated senior guaranteed notes that will carry an 8% annual coupon and mature in three years.

Lai Sun Development stated in a filing that adverse market conditions in the commercial real estate sectors of Hong Kong and mainland China have materially and negatively impacted the group's business, operating results, and financial and liquidity position. The company's portfolio includes office, retail, and hospitality projects in Shanghai, Guangzhou, Zhongshan, and Hengqin, as well as commercial and office buildings in Hong Kong, including Causeway Bay Plaza 2 and Cheung Sha Wan Plaza.

As of April, overall vacancy rates in Hong Kong's premium office spaces remained at 13.5%, unchanged from the previous month, according to JLL data. While some core office areas saw an increase in empty spaces, the vacancy rate in Central decreased to 9.2% from 9.6%.