Evergrande Chairman’s $89M Hong Kong Mansion Seized by Creditor

Evergrande’s credit crisis is denting the personal fortune of its founder Xu Jiayin, with local records in Hong Kong showing that a HK$700M ($89 million) mansion on Hong Kong’s Peak previously owned by a company controlled by the property billionaire has been seized by creditors.

China Construction Bank (CCB) Asia, the local unit of one of the mainland’s largest lenders, took control of House B at No. 10 Black’s Link on 1 November, according to Land Registry records seen by Mingtiandi, with local media linking the company which formerly owned the property to Evergrande and Xu.

The 5,171 square foot (480 square metre) property, which was one of a set of three mansions in the development owned by Evergrande-linked entities, is understood to have served as part of the billionaire’s family estate, and was mortgaged in October last year as Evergrande’s chairman dipped into his personal fortune in an effort to pay down debt.

CCB’s 1 November seizure of the property came one day after a tender for the sale of Evergrande’s Hong Kong headquarters closed with no apparent result. That 26-storey tower had been taken over by receivers appointed by China CITIC Bank International in early September.

Shell Game

Xia Haijun, formerly chief executive of Evergrande Group, held sole directorship of local private entity Atos Co, Ltd, which owned the Black’s Link mansion, and listed Evergrande’s then Hong Kong headquarters in Wanchai as his address, according to local media accounts.

Atos mortgaged House B to CCB during October last year, according to documents from the Land Registry, with HK01 indicating soon after that Evergrande had pledged the HK$700 million home in return for a HK$300 million loan.

Along with Evergrande chief financial officer Pan Darong, Xia resigned from the developer in July this year after being blamed for arranging illicit loans to Evergrande from its property management subsidiary.

Houses C and E, also controlled by Evergrande-linked entities, were pledged to Japanese financial services firm Orix Asia Capital Limited in November 2021 for undisclosed amounts – according to Land Registry filings, with a Bloomberg account at the time indicating that the pair of homes were pledged as collateral for a HK$821 million loan.

Xu had served as director of the private entity holding House C until resigning in favour of Xia in July last year, with all three homes said to have formed part of the Evergrande founder’s personal residence.

The former Evergrande mansion is situated less than a 5 minute drive from one of Hong Kong’s most exclusive new residential developments, No. 15 Shouson in Deep Water Bay, where a home was sold for HK$870.2 million in June, marking the most expensive residential transaction this year.

Creditors Strike

With more than $300 billion in total liabilities, Evergrande continued its saga of losses and defaults this week, having received a notice of enforcement for unrecoverable funds from Shengjing Bank Co Ltd.

The mainland bank, which until recently had been controlled by Evergrande, said it failed to recover funds totalling RMB 32.6 billion yuan ($4.5 billion), which was provided to the unit from 2020 to 2021, according to Evergrande in a filing to the Hong Kong stock exchange on Tuesday.

This month, Evergrande is also facing a winding-up hearing in Hong Kong’s courts, after being sued by owners of overdue dollar bonds, the South China Morning Post reported.

In October, the developer met with holders of a RMB 2.1 billion onshore bond in a bid to extend the interest payment date by six months in a continued struggle to meet its debt obligations. Days before the deadline, bondholders agreed to an extension of interest payment on the domestic bond to 19 April 2023.