China's Wanda to 'sell' Australia property projects in cash bid
Dalian Wanda Group, China's largest commercial property company, looks poised to sell two Australia residential and hotel projects as it continues to divest assets to raise cash and cut debt.
Reuters reported that an announcement of the latest sale, reported by The Australian newspaper to be worth 1 billion Australian dollars (800 million US dollars), is expected within days, citing sources with knowledge of the matter.
A deal would follow an agreement to sell interests in a high-profile London property development and help the group meet upcoming debt deadlines. Though how it will manage other debt due later in the year is less clear.
Reuters said China’s regulators last year told banks to stop providing funding for several of Wanda’s overseas acquisitions as part of a crackdown on what Beijing sees as irrational spending by some domestic conglomerates. Since then, Wanda, whose businesses range from real estate to football and cinemas, has embarked on a string of asset sales.
“Wanda has some cash offshore which is not enough to repay by the March deadline. But after the London and potentially other overseas asset sales, it should be able to alleviate its debt repayment pressure,” S&P Global Ratings associate director Dennis Lee was quoted by Reuters as saying.
Wanda Commercial Properties Co Ltd, which directly and indirectly holds stakes in overseas real estate assets, needs to make a 510-million-dollar payment on a syndicated loan by the end of March.
It has another 1 billion dollars to repay by end-May and has 600 million dollars in offshore notes due in November, ratings agencies have flagged. Fitch Ratings estimates that Wanda Commercial had total debt of around 34 billion dollars as of the end of September.
“My next question is how will Wanda prepare the (next) refinancing,” Lee added. S&P downgraded Wanda Commercial’s rating to junk last year.
Selling at cost
The two Australian high-end projects under development – the One Circular Quay in Sydney and the Jewel Resort on the Gold Coast – will be sold at around cost, one of the people said.
The sources quoted by Reuters declined to be identified as they were not authorized to speak about the deal.
The Australian newspaper reported that property developer Yuhu, which is backed by Chinese investors, had entered into exclusive talks with Wanda to buy the assets.
Shares in Wanda Hotel Development Company, which owns the projects, were put on a trading halt on Friday, pending a statement regarding a “very substantial disposal” by the company. It gave no further details.
An official at the Dalian Wanda Group declined to comment. A spokesman for Yuhu said in a text message that the company had no knowledge of any such transaction.
A sale of the Australian projects would come on the heels of Wanda’s announcement this week that it had agreed to sell its interests in the London luxury development project, One Nine Elms, for 59 million pounds (81 million dollars).
Last year, Wanda sold a portfolio of domestic hotels and tourism assets, including 13 theme parks, for 9 billion dollars to Guangzhou R&F Properties and Sunac China.
Wanda is also considering a Hong Kong listing for its sports assets as part of efforts to rationalize its portfolio, according to people familiar with the situation. Other flagship overseas developments in Chicago and Los Angeles are also available for sale, according to one source.
Responding to a local online media report that questioned the group’s financial health, Wanda last month said its 2017 revenues had surpassed 200 billion yuan and it had 200 billion yuan in cash.