Shui On Completes $701M Sale of Dalian Tiandi to Yida China

Vincent Lo’s Shui On Group has closed on the RMB 4.65 billion ($701 million) sale of its Dalian Tiandi mixed-use project to Chinese business park builder Yida China Holdings, six months after the transaction was first announced.

Completion of the deal took place on Monday, according to a Hong Kong Stock Exchange filing by Yida China. The Dalian-based company now wholly owns the 3 million square metre (32 million square foot) residential and commercial project in its home town, after previously holding an effective 30 percent stake in the venture.

The deal marks the latest disposal by Shui On, the developer of Shanghai’s landmark Xintiandi complex, which has shed some RMB 45 billion ($6.5 billion) of properties since 2013 as it struggles to reduce liabilities.

Business Park Builder Gets Complete Control

Dalian Tiandi comprises office, residential, and retail elements as well as hotels, educational facilities and a business park. The partially completed project is located within the national government-backed Dalian High-Tech Zone in the western suburbs of the city.

Prior to the deal, Yida, which is best known as the developer of Dalian Software Park, owned 22 percent interest in the project and a 10.3 percent stake in holding company Richcoast Group, which owned 78 percent interest in the project. The business park developer secured full ownership by purchasing a 61.5 percent equity interest in Richcoast Group from a unit of Shui On Land for RMB 3.19 billion ($481 million), along with a 28.2 percent interest from SOCAM Development, which is also helmed by Shui On Land’s chairman Vincent Lo, for RMB 1.46 billion ($220 million).

Hong Kong-listed SOCAM Development announced this past January that the final closing on the sale of the project had been postponed to the end of March, as the company had yet to obtain the consent of a unit of Japan’s Mitsui Corporation, one of the conditions of the deal. Mitsui Fudosan had signed a joint venture agreement with SOCAM and Yida in 2011 to develop 206,000 square metres of residential projects in Dalian Tiandi.

As of year-end 2017, Yida had a portfolio of six business parks, including the 680-hectare IT hub Dalian Software Park in the Dalian High-Tech Zone and Dalian Ascendas IT Park, a 50-50 joint venture with Singapore-based Ascendas-Singbridge, according to the group’s latest annual report. The parks have a combined leasable floor area of about 1.4 million square metres.

Deal Struck After Recent Sale Failed

The closing of the Dalian deal might come as a good news to Shui On Land, after the developer’s plan to sell a commercial project in Wuhan was aborted last month. Shui On had agreed in May 2016 to sell A1 Property, a 177,117 square metre commercial project under construction in the Jiang’an district of central China’s Wuhan, to a unit of CITIC China for RMB 3.37 billion.

The disposal of that Hubei province project, which will include a super high-rise tower for office and hotel uses, has now been terminated “due to potential changes to the construction plan of A1 Property arising from possible zoning and regulatory requirements,” Shui On said in a statement on May 3.

In tandem with the ill-fated disposal, Shui On had also agreed to sell a completed 55,053 square metre office tower adjacent to the A1 Property project to CITIC China for a total of RMB 1.13 billion. That agreement was amended last month to postpone the time for obtaining the property title certificates. “The A3 Disposal is still subject to fulfilment of certain conditions precedent and may be terminated in certain circumstances,” the filing adds.

The developer of Shanghai’s Xintiandi complex is striving to bail out its balance sheet by offloading projects. Shui On agreed in last October to dispose of a 49 percent stake in its mixed-use Knowledge and Innovation Community (KIC) project in Shanghai for RMB 2.95 billion ($443 million), reportedly to a unit of mainland insurer China Life.

In May, 2017, the developer offloaded a nearly 80 percent stake in its Chongqing Tiandi complex to China Vanke for RMB 4.1 billion ($598 million). Shui On’s largest sale to date was its RMB 6.6 billion ($1.06 billion) sale of Corporate Avenue in Shanghai to Hong Kong’s Link REIT in 2015.