Shui On Land Sells Hangzhou Project After Sales Dive 56%

Troubled real estate developer Shui On Land took a small step towards shoring up its cashflow recently when it sold its Xihu Tiandi retail development to a Hong Kong investment firm for an undisclosed sum.

According to an announcement to the Hong Kong Stock Exchange, Shui On sold the 6,000 square metre project on the shores of Hangzhou’s West Lake to Golden Rice Investment Co Ltd, a little-known Hong Kong incorporated company which is said to primarily invest in securities, precious metals and commercial real estate.

Daniel Y. K. Wan, CFO of Hong Kong-listed Shui On explained the sale as part of the company’s efforts to sell off non-core assets to help improve the company’s balance sheet.

“The Company will focus its resources and to accelerate the development of Shanghai, Wuhan, Chongqing, Foshan and Dalian project, where we have significant portfolio of properties under development and for future development,” Wan indicated in the company’s statement.

Shui On, which became famous for developing the Xintiandi project in Shanghai has made several moves in the last year to try to improve its financial standing as the market endures a downturn and its sales slide.

In early May, Shui On revealed that its sales for the first four months of this year reached just over RMB 2 billion, down 56 percent from the same period last year, and representing less than 16 percent of its sales target for the full year.

More Sales May Be on the Way

During the last year Shui On has already sold off equity and assets in order to shore up its financial standing, and its CEO was abruptly let go early this year in a move widely seen as related to the company’s struggles.

Last year the Shanghai-based developer sold $750 million in equity to Canada’s Brookfield Property Partners LP after a planned IPO of its China Xintiandi spinoff failed to attract adequate investor interest. In the last two months the company has refinanced existing debt and issued new bonds to help improve its cash on hand.

The sale of the Hangzhou property seems to continue a string of asset sales that started last year, albeit on a smaller scale. In early December Shui On sold its Chongqing Tiandi property for RMB 2.4 billion (US$393 million) and an uncompleted Shanghai office tower for RMB 3.32 billion ($545 million) in separate transactions.

And it appears that the company may not be done selling assets this year, as it struggles to meet its revenue targets. Commenting on the sale of Xihu Tiandi in the local press, a Shui On executive said, “Our goal is to sell RMB 5 billion in commercial property this year as we seek to expand our earnings and increase revenues through sales of business assets.”

The company also made clear that it remains hopeful of achieving an IPO for its China Xintiandi subsidiary within the second half of this year.