A subsidiary of China’s Guangzhou R&F Properties went into liquidation this month after the supreme court of the country’s Victoria state ordered the company be wound up, according to a report today in The Australian.
The legal setback for R&F, which has distinguished itself by its willingness to pay multiple times the perceived market value for sites in Australia and the US, comes as the top 15 Chinese developer continues to sign agreements for multi-billion dollar projects down under.
The company, which previously vowed to spend A$500 million ($384 million) buying development projects in the country has said it will contest the court’s decision.
Lawsuit? What Lawsuit?
In a judgement dated February 1st, the Victorian Supreme Court declared R&F Mega Property to be insolvent, after creditors sued the Australian subsidiary of the Hong Kong-listed company. A partner at accountancy firm Deloitte has been appointed as liquidator. R&F representatives did not attend the proceedings, according to the media account.
R&F has already said it will fight the decision, claiming that it was previously unaware of the court proceedings.
“It is alleged that R&F Mega Property was served documents by representatives of a creditor,” the company’s deputy general manager Amy Zhang was quoted as saying in The Australian. “However, R&F Mega Property has no records of having received those documents and accordingly did not respond to the application.”
“R&F Mega Property immediately started to communicate with the liquidator to proactively resolve this matter,” Zhang went on to indicate, adding that, “An application will shortly be submitted to the court to terminate the liquidation.”
Decision Hits R&F Flagship Project
R&F Mega Property holds the developer’s flagship property in Brisbane, Australia, the 600 unit Brisbane 1. The A$400 million project began sales in November 2015 and representatives of CBRE, which was marketing Brisbane 1, said that more than A$50 million in homes were sold during the project’s first month.
In the developer’s most recent sales update regarding Brisbane 1, R&F said in a statement to the Hong Kong stock exchange dated August 31, that sales for the project had reached RMB 353.1 million (A$67 million).
First the Record Bids, Now the Insolvency
R&F had shocked the market when it paid Brisbane developer Metro Property A$46 million for the Brisbane 1 site in 2014, more than twice what the local company had paid less than nine months earlier.
In 2015, R&F agreed to buy another Brisbane site, which was known to suffer from soil contamination, for A$82.5 million after a local developer had paid A$26 million for the riverfront land in 2013.
Mainland Developer Still Buying in Australia
Despite the court decision regarding Brisbane 1 on February 1st, on February 2nd a company in another part of the city was revealing a new $4.8 billion partnership with R&F.
According to a statement by the Springfield Land Corporation, which is developing a planned community in southwest Brisbane, R&F and another Chinese firm agreed to build around 10,000 homes there over the next 15 years, with a value of A$6.3 billion ($4.8 billion).
The developer now has no less than four projects in the capital of Australia’s Queensland state, as well as undertaking developments in Melbourne, in Victoria state.
Just last month the developer announced that it plans to invest $3 billion to build six star hotels in Cambodia, and the company has been one of the biggest Chinese investors in Malaysia with six projects in the southeast Asian nation.
In the US, Guangzhou R&F has acquired three properties in San Francisco, including paying $28.5 million in cash during 2015 to acquire the Rincon Hill project site at 325 Fremont Street in San Francisco. The company also has a residential project in San Jose, California.