Jingrui will realise a slim capital gain on its investment in the 1990s-era building
Jingrui Holdings has agreed to sell a commercial building in Shanghai’s Xuhui district to state-owned China Construction Bank for RMB 132.4 million ($19.2 million), as the mainland developer continues to unload assets after a recent default on offshore debt.
Jingrui acquired the building on Xiaomuqiao Road, known as Shanghai Jingrui Shenxin Tower, in 2017 for RMB 102 million as an investment property. The Shanghai-based builder expects to record a profit of less than RMB 1.4 million from the disposal after expenses, according to a Sunday filing with the Hong Kong stock exchange.
Upon completion of the sale, Jingrui will continue to provide property management services to the 1990s-era building, which it previously renovated.
“The disposal would help ease the liquidity issue of the group,” Jingrui co-chairmen Yan Hao and Chen Xin Ge said in the filing. “The proceeds will be applied as general working capital of the group.”
Rental Housing Conversions
Shanghai Jingrui Shenxin Tower was independently valued at RMB 150.3 million in February. At the agreed consideration of nearly RMB 132.4 million, China Construction Bank will pay RMB 39,389 ($5,718) per square metre for the property’s 3,361 square metres (36,178 square feet) of gross floor area.
Jingrui co-chairman Yan Hao looks shocked by his recent cash woes
Under the terms of the deal, Jingrui will refrain from acquiring, constructing or investing in long-term rental apartment projects within 1 kilometre (0.6 miles) of the property unless prior consent from China Construction Bank has been obtained.
Bloomberg reported last September that the state-owned bank was setting up a RMB 30 billion ($4.2 billion) fund to buy properties from developers and convert them into rental housing.
Around that same time, the bank acquired a commercial building in Shanghai’s Jing An district from Jingrui in a transaction valuing the North Zhongshan Road property at RMB 92 million.
Defaults Pile Up
Last month, Jingrui defaulted on offshore bonds after it failed to make payment on the outstanding principal amount of $350 million and accrued interest of $12.7 million for senior notes that matured on 19 February.
To address the non-payment, which followed earlier defaults on offshore bonds last year, the builder said it was in the process of considering a potential holistic restructuring of all dollar-denominated senior notes issued by the group.
Jingrui has yet to release its 2021 financial results after PricewaterhouseCoopers resigned as the company’s auditor last May following a dispute over the disappearance of more than RMB 4.9 billion in claimed bank deposits.
The developer’s contracted sales for the first two months of 2023 totalled RMB 796 million, down 34 percent from the year-earlier period, it said in an HKEX filing.
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