What’s new: Struggling property developer Sunac China agreed to sell nearly 90% of its interest in one of its most valuable projects in Shanghai to two state-owned investors.
Sunac sold a 64.7% stake in its Oceanwide Construction Holdings unit, which owns the Dongjiadu project in Shanghai, to a unit of China Huarong Asset Management for 5.82 billion yuan ($826 million). It also sold 25% of the subsidiary to Citic Trust for 2.25 billion yuan, business registration information showed.
After the sale, Sunac China retains a 10.3% stake in Oceanwide. Sunac China acquired Oceanwide for 12.55 billion yuan in 2019 after the developer hit a cash crunch. In addition to the Dongjiadu development, Oceanwide owns the Beijing Oceanwide International Project Land Lot 1.
Sunac built luxury homes on the Dongjiadu plot, branded as Shanghai Bund One. So far, most of the project remains unbuilt. A housing unit in the project sold on the resale market in July for 223,000 yuan per square meter, data from housing trading platform Beike showed.
The acquisition aims to inject funds to revitalize the Dongjiadu project and does not involve the Beijing Oceanwide project, Caixin learned from sources. In the future, Sunac intends to buy back the Oceanwide stakes after repaying debts on the project.
The background: Sunac has been deeply embroiled in a liquidity and debt crisis as it seeks to restructure onshore and offshore bonds totaling 46 billion yuan.
In the first 10 months of 2022, contract sales of Sunac were 153.1 billion yuan, down 70.2% from the same period last year. The developer estimated that it swung tens of billions of yuan into the red last year after previously forecasting billions in profit as it makes provisions for mounting losses from properties and other business contracts.
Sunac’s Hong Kong-traded shares have been suspended since April because it failed to disclose its 2021 financial statements on time.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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