Zendai Completes Sale of Jiangsu Province Assets to State-Owned China Orient for $32M

Shanghai Zendai Property has completed the sale of most of the developer’s stake in a collection of properties and development sites in Jiangsu province for RMB 225 million ($32.3 million).

The completion took place Tuesday, Zendai said in a filing with the Hong Kong stock exchange. The buyer, state-owned China Orient Asset Management, made a RMB 202.5 million payment in cash, with the balance of RMB 22.5 million to be transferred within nine months, according to a circular spelling out details of the deal.

The disposal of Myway Developments Ltd, a BVI-incorporated subsidiary of Zendai, will leave the Shanghai-focused builder with a 9.09 percent stake in Haimen Zendai, a unit that holds a commercial complex, unsold residential units and land parcels in Haimen and three commercial properties and two construction sites in Nanjing. Zendai also retains a 10 percent equity interest in the Nanjing Thumb commercial complex.

The company has been exploring different options to reduce its gearing and improve its liquidity and financial position, Zendai chairman Huang Yuhui said in the circular. To this end, the developer is selling parts of its property portfolio and shifting to an asset-light model, he said.

Gain Anticipated

Zendai expects to record a pre-tax gain on the disposal of HK$4.65 billion ($600 million), based on the consideration of RMB 225 million (equal to HK$265.5 million) and the unaudited combined net liabilities of the disposed assets of HK$4.05 billion, plus other adjustments.

The developer continues to wholly own projects including Shanghai Zendai Thumb Plaza and the Himalayas Qingdao Hotel, and it holds 45 percent stakes in the Shanghai Himalayas Center and the Jumeirah Himalayas Hotel Shanghai.

The company has extended its presence to 10 large and medium-sized cities in China by engaging in the asset-light property management business, overseeing business plazas, office buildings and high-end residences.

In 2021, Zendai managed more than 30 projects with a total area of close to 3.3 million square metres (35.5 million square metres) and generating operating revenue of HK$126.5 million.

Out With the Old

The asset disposal caps a forgettable year for Zendai, whose CEO Zhang Zelin tendered his resignation in late August “due to other business commitments”.

After Zendai founder and former chairman Dai Zhikang surrendered to police in 2019 over a peer-to-peer lending controversy that later saw him placed in custody for illegal fundraising, the company has suffered rapid turnover in its senior leadership.

Zhang’s departure followed a profit warning issued on 18 August in which Zendai said it expected to report a first-half decline in revenue and gross profit of 55 percent and 37 percent respectively, due to a decrease in properties being delivered and recognised as revenue.