Receivers Appointed for 69 Mainland Properties in Guangzhou R&F Wind-Up Case

Guangzhou R&F Properties on Wednesday announced that receivers had been appointed for a set of mainland properties at the heart of a winding-up case filed against the cash-strapped builder.

Chan Leung Lee and Yuen Tsz Chun of Hong Kong-based Frank Forensic and Corporate Recovery are the appointed receivers for 68 hotels and an office building held by R&F’s Hong Kong-incorporated subsidiary Trillion Glory, the developer said in a stock filing.

A private credit fund filed a winding-up petition against Trillion Glory in Hong Kong’s High Court in July over non-repayment of the fund’s share of a loan with $613.66 million in principal and accrued interest. The fund managed by SeaTown International, a unit of Singaporean state investor Temasek, holds 18 percent of the principal amount of the loan, which is collateralised by a pledge over the entire equity interest in Trillion Glory.

“The company is assessing the legal, financial and operational impacts of the appointment of the receivers,” R&F said in the filing.

Unknown Hotels

R&F gave no information about the 68 hotels and office building. The developer led by co-founder and chairman Li Sze Lim lists 90 hotels under operation in the group’s 2023 annual report, spanning more than 3.9 million square metres (42 million square feet) and 27,716 guest rooms.

R&F’s portfolio contains assets from a 2017 deal in which the group acquired 77 hotels from fellow mainland builder Dalian Wanda Group for $2.9 billion. After disposals including the Wanda Realm Beijing in 2022, the annual report lists 50 Wanda-branded hotels, mainly in second- and third-tier cities.

R&F said in July that it had been “proactively communicating” with the SeaTown credit fund and did not believe that the petition would have any meaningful impact on the business operations of the group.

In April, R&F averted default on an £800 million project loan for its One Nine Elms development in southwest London, signing a deal to sell the $1.3 billion condo and hotel project to Chinese tycoon Cheung Chung-kiu of CC Land after winning consent from bondholders to restructure an existing financing deal linked to the asset.

The restructuring followed a July 2022 deal in which bondholders agreed to give the company more time to pay off its obligations.

In May, R&F agreed to sell its Vauxhall Square site in southwest London to an investor backed by Middle Eastern money, Bisnow reported.

Mission: Improbable

Temasek-backed SeaTown, which recently reached a $1.3 billion final close of its second private credit fund, is bidding to recoup some value from R&F after the Hong Kong-listed group last month announced a default on a payment for offshore bonds worth more than $4.5 billion.

Seizing mainland assets has been a rarity for offshore creditors of China’s troubled builders. In one such instance, the Financial Times reported that US-based Oaktree Capital had taken charge of China Evergrande’s sprawling Venice residential project in the Jiangsu provincial city of Qidong.

Local creditors may have more direct access to assets held by defaulting mainland developers, with Nanjing-based builder Jiayuan International earlier this year reporting that a Qingdao project had been seized, potentially by a firm linked to domestic creditors or the local government.