CIFI Buying Out Henderson Land’s Half-Stake in Shanghai HQ Project for $60M

Mainland builder CIFI Holdings is buying out the 50 percent interest held by Hong Kong’s Henderson Land in a Shanghai residential and commercial project containing CIFI’s headquarters, with Henderson set to be paid RMB 428.2 million ($59.7 million) for the half-stake.

The project, located in the Hongqiao commercial hub of Minhang district, comprises fully sold residential properties and an office complex known as Building 39 at Shanghai Henderson CIFI Center. Building 39, where the CIFI headquarters is situated, has a gross floor area of 15,700 square metres (168,993 square feet).

Upon completion of the deal, the entire equity interest in the Hongqiao project will be controlled by CIFI, which said in a Monday stock filing that unwinding the joint venture would allow for more flexible management of the now-finished project.

“Following completion of the corporate steps under the equity transfer agreement, the company will gain full control over the deployment of the Hongqiao project, which will not only ensure the group’s autonomy in managing the Hongqiao project but also allow the group for more effective strategic decision-making,” chairman Lin Zhong said in the filing.

Resale Potential

CIFI originally acquired the 84,751 square metre site of Shanghai Henderson CIFI Center for RMB 2.14 billion in November 2013. A month later, Mingtiandi reported that CIFI had entered into a deal with Henderson to jointly develop 167,249 square metres of gross floor area for residential and commercial use.

In March of this year, a source confirmed to Mingtiandi that CIFI had been marketing Shanghai Henderson CIFI Center for “some time”, with the group said to have been seeking RMB 880 million for its headquarters in one of two towers at the centre and RMB 550 million for the other tower.

In addition, Shanghai Henderson CIFI The Roof, a commercial complex near Xintiandi, had lined up a “pretty committed buyer” through property consultancy Colliers, the source said in March. Both potential disposals were first reported by the South China Morning Post.

The Hongqiao deal comes after CIFI announced in September that it was selling a 50 percent stake in a Guangzhou development project to Henderson for RMB 240.3 million. Last week, CIFI disclosed that it was selling a 49 percent stake in a Tianjin residential project to mainland-based Finance Street Holdings for RMB 435.5 million.

Shanghai-based CIFI suspended payments on all its offshore debt in November of last year after failing to reach an agreement with creditors to which it owed $414 million.

Profiting From Mainland Cash

This week, Henderson announced the sale of Harbour East, a four-year-old office tower in Hong Kong’s North Point area, to Chinese gymnastics great Li Ning’s eponymous sportswear company for HK$2.2 billion ($282.8 million).

Li Ning says it intends to set up its local headquarters in the 24-storey, 13,378 square metre building, which is to facilitate the firm’s business in Hong Kong and provide a gateway to markets further afield.