Shui On Group’s $701M Dalian Project Sale Hits a Snag

Companies belonging to Shui On Group have signed contracts to sell over RMB 8 billion in projects in the past two months, but the Shanghai-based property firm may have to wait a bit longer to receive at least half that cash after failing to reach agreement with some of the stakeholders in a project in northeastern China’s Dalian.

Shui On Land’s affiliate SOCAM Development has yet to obtain the consent of a unit of Japan’s Mitsui Corporation, which is necessary for the proposed RMB 4.65 billion ($701 million) sale of its Dalian Tiandi project. According to a statement to the Hong Kong Stock Exchange, SOCAM Development said that final closing on the sale of the project, which was originally agreed in November,  has now been postponed to the end of March.

Sale to Yida China Held Up by Mitsui

The developer of Shanghai’s landmark Xintiandi previously announced the $701 million sale of the Dalian Tiandi Project to Yida China, the developer of Dalian Software Park, which was already a partner in the project. As part of that deal, a unit of Yida would need to acquire a stake owned by Japanese developer Mitsui Fudosan in a project company related to Dalian Tiandi — a transaction which has not yet been completed. In 2011, Mitsui Fudosan had signed a joint venture agreement with SOCAM and Yida to develop 206,000 square metres of residential projects in Dalian Tiandi.

Mitsui’s sign off is necessary before Dalian Tiandi can settle loans to the project’s creditors and the disposal can proceed. In the statement, SOCAM indicated that it now expects the process to be complete by the end of March.

Shui On Keeps Selling (and Buying) Mainland Assets

Hong Kong tycoon Vincent Lo’s Shui On Land has been reshuffling its portfolio in recent months. Shui On Land sold almost 49.5 percent of its stake in prime Shanghai property projects Rui Hong Xin Cheng to China Life Insurance for $630 million, claiming to pursue an “asset-light strategy” in its filing to the stock exchange last month.

The developer said the transaction would “optimise the value of some of its mature investment properties and to recycle its capital into other new opportunities,” which explains why the company announced on the same day that it had won a public tender of the Jianfa Junyi complex in Shanghai’s Minhang district for $173 million.

The Jianfa Junyi acquisition would replenish the developer’s office portfolio in what Shui On sees as an up and coming office location in China’s commercial capital, the company said in a statement last month.

Earlier in last October, Shui On also sold a 49 percent stake in its mixed-use Knowledge and Innovation Community project in Shanghai for $443.1 million, which was also described by the company as part of its “asset-light strategy.” The project is made up of 400,000 square metres of retail, office, hotel, car park and clubhouse properties.