(March 26): Hong Kong builder Parkview Group Ltd has avoided a default on a US$940 million (RM4.16 billion) loan and is in refinancing talks with banks over the facility, which backs a Beijing shopping mall complex, according to people familiar with the matter.

The company managed to replenish a shortfall in its interest reserve account — funds set aside to service loan charges — before a March 17 deadline, according to the people, who asked not to be identified discussing private matters. The account was about RMB20 million (RM12.18 million) short of the amount required to be maintained at all times after Parkview used some of the funds to partially settle an interest payment, Bloomberg reported earlier.

Parkview also held discussions with bank lenders last week seeking options to refinance the loan, which is due to mature in August, the people said.

Parkview didn’t respond to a request for comment.

The refinancing discussions come as worries grow over the cash-strapped builder’s ability to repay the facility. Rental income generated from Parkview Green, which acts as collateral for the loan, hasn’t been enough to cover interest payments due to the mixed-development’s low occupancy rates.

China’s commercial real estate sector has been suffering from a lengthy downturn, but there have been some signs of recovery. Beijing’s city-wide vacancies edged down 0.4% in 2024 from the prior year to 18.3% as landlords moved to trim rents to spur occupancy, according to a report by real estate services firm Cushman & Wakefield.

Parkview recently engaged a Shanghai-based property manager to launch an upgrade for Parkview Green in an effort to improve the mix of shops and restaurants in the mall, according to an emailed press release.

Parkview Green, locally known as Fang Cao Di, is located in Beijing’s central business district and is known for its pyramid-shaped structure. It includes a shopping mall, hotel, office towers and an arts hub, according to its website.

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