Schroders Could Lose Second HK Asset This Summer as UOB Mulls Mall Foreclosure

UK fund manager Schroders could see creditors take over a second property from its Hong Kong portfolio in just over a month as Singapore’s UOB mulls seizing a North Point shopping mall following a default on a HK$1.5 billion ($190 million) loan. 

A joint venture between Schroders Real Estate and a fund managed by UK investment house Chelsfield came up short of their obligations on the loan backed by the Worfu mall earlier this year after the owners had failed to find a buyer in a marked down marketing effort, with news of the potential foreclosure having first been reported by Bloomberg.

“We are in discussion with the banks on managing the assets to deliver the best possible outcome,”a Schroders spokesperson told Mingtiandi when reached for comment. Representatives of Chelsfield and UOB had yet to respond to MIngtiandi inquiries by the time of publication.

Tough times at Worfu come after the local arm of China’s Bank of Communications early last month foreclosed on the Nate, a Schroders project on Kowloon’s Nathan Road, after a fund managed by the UK firm defaulted on a loan reported by market analysts to be around HK$330 million.

Retail Slide

Before tapping UOB for a loan on the Worful mall in 2021, according to Land Registry records, Pamfleet, the predecessor company of Schroders’ Hong Kong operation, had teamed with Chelsfield in late 2017 to acquire what was then the Provident Square mall from HKEX-listed Fortune REIT for HK$2 billion.

The fund managers repositioned and upgraded the retail asset before launching it in 2021 as Worfu, with much of the space leased to educational service providers. Pamfleet was acquired by Schroders in 2020.

In January this year, Schroders appointed CBRE to market the 210,000 square foot (19,510 square metre) mall at an asking price of HK$1.6 billion, or 20 percent below the acquisition price. That effort failed to result in a transaction.

UOB is pondering the future of the Worfu mall after Hong Kong retail sales declined 4 percent in the January to May period, compared with the same period of 2024,  according to Cushman & Wakefield. 

“The market sentiment for retail properties in Hong Kong remains notably weak. Only China Resources Longdation continues to deploy capital into mall acquisitions. Even so, they began to offload assets at the Peak last month,” Alex Leung, chief surveyor at Hong Kong-based CHFT Advisory and Appraisal, told Mingtiandi.

Nate on the Market

Soon after receivers took over the Nate, a combined residential and retail property at 176 Nathan Road in Tsim Sha Tsui, property agency Savills launched a tender for the five storey block, with that campaign set to conclude on Monday, 18 August. 

After a March 2024 marketing campaign had failed to find a buyer for the Nate had failed to find a buyer at a HK$550 million asking price, Schroders tried again in October last year at a HK$400 million target.

Pamfleet had teamed with local asset manager District 15 in 2016 to acquire the Nate for HK$600 million in 2016 with the partners reportedly having invested nearly another HK$100 million on renovations.