Hui Ka Yan’s Luxury Asset Sales Likely To Attract Eager Buyers
Published 11 November 2021, 06:15 am EST
Chinese real estate billionaire Hui Ka Yan is under pressure to repay some of Evergrande’s massive debts by tapping into his personal wealth, and the embattled tycoon appears to have at least one thing on his side—a buoyant market with eager buyers for ultra-luxury assets like his.
Hui, who now has a net worth of $11.3 billion, still owns a superyacht and private jets that are worth close to $300 million combined, according to analysts and media reports. He has already pledged a luxury villa in Hong Kong for a loan, sold two Gulfstream jets for around $50 million and is looking for buyers for a much larger Airbus ACJ330 wide-body jet, according to media reports.
Although a rushed sale usually pushes asset prices down, demand for yachts and private jets is especially strong at the moment because supplies have become increasingly scarce, analysts say. Evergrande, now close to collapsing under $305 billion in total liabilities, has managed to narrowly avoid default one more time by paying another $148 million on Wednesday in overdue bond interest. The payment came right before a 30-day grace period was about to end on November 10.
Joseph Fan, a professor of finance at the Chinese University of Hong Kong, says the “outcome of the debt crisis will determine Hui’s fate,” and he “must be under pressure from the party” to make the bond payments by deploying his personal fortune. Although China’s state media signaled on Thursday that the crackdown on the real estate sector may ease and October home lending figures actually rose from last year, Evergrande still has little chance of generating enough cash to pay down liabilities because it borrowed too much money, according to Chuanyi Zhou, a credit analyst at Singapore-based Lucror Analytics.
Zhou says an eventual debt restructuring is still the most likely outcome. Evergrande also missed $82.5 million in initial interest payments for two dollar-denominated bonds due on November 6, kicking off a 30-day grace period that will end on December 6. It also has to pay another $255 million in a bond coupon on December 28.
The company didn’t respond to an emailed request for comment, and it isn’t immediately clear if anyone has approached Hui to buy his remaining assets. But the embattled billionaire is certainly not without leverage.
“The market is very good at the moment,” says David Yu, adjunct professor of finance at New York University Shanghai and chairman of China Aviation Valuation Advisors, the only specialist aviation valuation advisory firm in the country. “Ever since Covid, private jets are in demand because people don’t want to use commercial aircraft.”
The Airbus ACJ330 jet, which Hui acquired for $220 million a few years ago, carries exclusivity of its own, according to Yu. The model has been used by heads of states to travel, he says. Hui’s jet, which was constructed with a shower, bedrooms and entertainment facilities, takes years to manufacture. “There are special buyers looking for it,” Yu says, adding that it is either large corporates or very rich people who don’t want to wait and may need one right away.
Currently moored in Hong Kong, Hui’s superyacht Event is another symbolic piece of his fortune. Acquired in 2013, the 60-meter boat has a value of $47.4 million, according to data provider VesselsValue.
The billionaire hasn’t said publicly whether he intends to sell it or not, but potential buyers are abundant partly due to the “wealth creation associated with the very strong post-Covid global stock markets,” says Sam Tucker, head of superyachts at VesselsValue.
“In the yachting sector, supply is not able to respond quickly, so this extra demand is putting upward pressure on values,” Tucker said in an emailed note. “We are seeing unprecedented levels of transactions, which are running at roughly twice the usual rate.”
By Yue Wang