With its erstwhile owner ensconced in at Manhattan penthouse hurling insults at China’s ruling communist party, a Beijing office tower was sold for RMB 5.2 billion ($730 million) this week on a bad asset website operated by Alibaba’s Taobao.
Yu Cheng Realty, a subsidiary of Beijing’s largest building materials supplier, purchased Pangu Plaza Tower 5, which is part of a mixed-use complex developed by now fugitive Chinese billionaire Guo Wengui, through a court-ordered online auction on 19 August, according to the business data search firm Tianyancha.
The highly anticipated public tender attracted a registered audience of 144,403 users to follow the proceeding, however, only two bidders put down the minimum RMB 1 billion deposit required to take part in the online tender.
Office Tower Sold on Third Try
The unit of Hong Kong-listed cement-maker-turned developer BBMG Group logged off of the Taobao site with its 139,400 square metre (1.5 million square foot) prize after two previous attempts to auction the office tower near Beijing’s Bird’s Nest stadium had failed to attract a buyer.
The two bidders made their offers for the tallest element of the five building complex within the last 20 minutes of the 24-hour tender with Yu Cheng’s winning bid only RMB 5 million higher than the auction reserve. At the sale price, the unit of BBMG is acquiring the office element of the only commercial complex within Beijing’s Olympic Village for approximately RMB 37,209 per square metre, or about half the market price for grade A office space in the area.
The Beijing courts had listed Pangu Plaza on the distressed assets website in July, to allow the Bank of Shanghai and other creditors to recover some of the RMB 3 billion ($425 million) debt owed by Guo, who fled to the US to avoid investigation in China, after other members of his network were taken into custody in a government anti-corruption drive.
The office tower, which serves as a home for IBM China and other corporate tenants, had been appraised at a value of RMB 7.403 billion according to a third party evaluation cited in the auction documents, with the controversy surrounding Pangu Plaza’s former owner having complicated efforts to sell the asset.
Political Drama Makes Beijing Complex an Orphan
The 410,000 square meter Pangu Plaza, which has the distinction of having appeared in the Transformers movie franchise, comprises five buildings extending some 700 metres along the North Fourth Ring Middle Road.
The procession of buildings is led by the 192-metre Tower 5 as the “dragon’s head” followed by a set of three residential blocks and a hotel as the mythical serpent’s body. Guo gave up the complex, which was voted as one of China’s ugliest developments in a 2011 public survey, along with most of his mainland assets, after his political comprador, deputy minister of state security Ma Jian, was ousted during party infighting.
Ma came under investigations for violation of party discipline in 2015 and was sentenced to life in prison on corruption charges in December 2018.
Last year, 49 condos and 19 office units at Pangu Plaza worth a total of RMB 8 billion were put up for auction individually, with the cheapest made available at a reserve price of RMB 46 million and the most expensive requiring a RMB 83 million starting bid. All of the units were made available at estimated discounts of 20 to 30 percent from market rates, however, most of these units reportedly failed to find a buyer.
The second auction, with a 20 percent discount across the entire portfolio, was scrapped in February for lack of interest.