Debt-ridden Chinese real estate giant Evergrande wants to sell its Hong Kong headquarters
AFP, published on Thursday, July 28, 2022 at 10:12 am
Troubled Chinese real estate developer Evergrande has reportedly found a potential buyer for its Hong Kong headquarters, days before the company’s expected restructuring plans were announced Thursday.
CK Asset Holdings, founded by Hong Kong billionaire Li Ka-shing, said it had submitted a bid for the 26-story building, which Hong Kong media said is currently valued at HK$9 billion.
Evergrande, the former number one property sector in China, has tried to sell assets and reduce its stakes in other companies in recent months after piling up arrears estimated at around $300 billion.
To reduce the sector’s indebtedness, Beijing has gradually tightened conditions for developers to access credit since 2020, which has dried up sources of funding for already indebted groups.
A wave of insolvencies followed, including at the Evergrande Group.
The former Chinese real estate number one is banking on its survival and is expected to unveil the beginnings of a restructuring plan in the coming days.
When the group acquired its headquarters for $1.61 billion in 2015, it was the largest office building deal in Hong Kong in terms of price per square meter, according to local newspaper South China Morning Post.
Last October, the building was offered to Chinese state developer Yuexiu for $1.7 billion, but the buyer backed out over concerns about Evergrande’s unresolved debt.
Evergrande fired its CEO and chief financial officer last week after an internal probe into why banks had seized more than $2 billion from the company’s real estate services arm.
The group’s poor financial health puts its peers at a disadvantage as buyers become increasingly reluctant to invest in real estate.
Weakened, some developers are struggling to continue their construction sites and timely delivery of units sold before construction begins.
In retaliation, angry owners are refusing to pay the project promoters monthly installments, adding to the crisis in the industry.
Analysts believe the shock could be felt well beyond its borders if the crisis spreads to China’s financial system.
Contacted by AFP, Evergrande was not immediately available for comment.