Luxhome Real Estate: Issuance of USD Bonds in Hong Kong by a Chinese Property Developer
Luxhome Real Estate (Tancheng) Limited (Luxhome) was a real estate company in Tancheng, Linyi, Shangdong Province. Established in 2002 by the Zhang brothers, the company became a prominent player in the local real estate market. By 2022, Luxhome was known for its high-end residential properties and was a trusted name in the local real estate industry. Due to its outstanding track record and strong relationship with the local government, the government invited the company to develop a large piece of land into a commercial-residential complex—a project that could take the company to the next level. The scale of the project was so immense, however, that the company was not able to complete it without third-party financing. However, government policies and soaring interest rates had made loan financing more difficult. Despite these challenges, the Zhangs were eager to pursue the project. They suspected that the government might start loosening its policies to encourage economic growth. Considering these potential changes, they actively looked into various options such as US Dollar bond issuance in Hong Kong to secure the necessary funding and bring the project to fruition.
In the case, students take on the role of the Zhang brothers, founders of Luxhome, and the management team. Through this lens, students have the opportunity to imitate business decision makers and analyze the issues about US Dollar bond offerings in Hong Kong by a Chinese developer.