[HONG KONG] A Hong Kong property dynasty that became one of the city’s most prolific collectors is discovering the limits of the burgeoning world of art-backed lending.
The family behind Parkview Group, which narrowly avoided a default in March, sought a loan earlier this year from international auction house Sotheby’s, sources familiar with the matter said. It was to be backed by more than 200 artworks, from the likes of Andy Warhol, Pablo Picasso, Salvador Dali and Chinese artists such as Yue Minjun, Qi Baishi and Zao Wou-ki, according to the sources.
But the talks hit a standstill amid concerns including the logistics of getting the art into the auction house’s warehouses, one of the sources said. Parkview did not respond to requests for comment after earlier saying that there had been initial discussions with Sotheby’s some time ago, but no loan was ever agreed and there is no intention to complete any such borrowing. Sotheby’s declined to comment.
The attempt itself, though, is a window onto the burgeoning world of art lending, where pieces are used to secure loans, often allowing affluent owners to tap their collections for cash without having to part with prized possessions. It also underscores the challenges at Parkview, whose finances have been strained by the prolonged slump in Hong Kong’s property market and reluctance among banks to lend.
Alexander Wong, director of Hong Kong Parkview Group, through his representatives, held talks with Sotheby’s earlier in the year, the sources said.
The collection included Picasso’s Femme Tenant Un Chat Dans Ses Bras, several of Warhol’s Marilyn Monroe series, Dali’s Dragon Swan Elephant sculpture and Vincent Van Gogh’s Girl in the Woods, among other pieces, according to documents seen by Bloomberg News.
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Some of the proposed artwork in the list have been displayed in a clubhouse at Parkview’s residential development in Hong Kong and its Parkview Green mall in Beijing.
Parkview has been looking for new sources of funding. The company got a HK$300 million (S$49 million) loan from investment firm PAG, Bloomberg News reported last month. It has also been in talks with private credit lenders since late last year for financing of at least HK$2.8 billion, using two residential towers as collateral.
While Parkview is based in Hong Kong, it also has properties in mainland China, Japan and Singapore and other places, according to its website.
It’s currently in talks with banks to refinance a US$940 million loan maturing in August, backed by its Beijing mall complex, Bloomberg has reported. That’s after it avoided a technical default on the facility in March.
Sotheby’s extended its art financing services to Hong Kong late last year, joining HSBC Holdings and Citigroup’s private banking arm as lenders that provide loans backed by alternative assets. Such facilities are generally secured by art and collectibles and are usually in the form of term loans or short-term advances backed by consignments with the firm.
Globally, Sotheby’s financial services arm has doubled its loan volume to more than US$1.6 billion since 2021, the auction house said in December. It also raised US$700 million through its first art-backed debt security last year, repackaging personal loans given to art collectors. BLOOMBERG
