Troubled mainland developer Tahoe Group on 27 April announced to the Shenzhen stock exchange that it has agreed to sell a 49 percent stake in a mixed-use project in Hangzhou, the capital of China’s Zhejiang province to Shimao Properties for RMB 928 million ($137.90 million).
The disposal of the near-half stake in the 314,500 square metre (3.39 million square foot) property brought Tahoe’s sales to Shimao to RMB 3.74 billion in just over one month as the troubled developer rushes to climb a mountain of pending financial obligations.
Raising RMB 784M in Cash
Under the terms of the sale and purchase agreement, Shimao will be paying Tahoe equity consideration of RMB 784.47 million in return for its stake in the project, as well as taking responsibility for RMB 144.12 million in shareholder loans.
The deal puts Shimao into partnership with Zhejiang provincial government backed Tongren Group, which holds the remaining 51 percent in equity in western Hangzhou’s Lin’an district.
The transaction comes just a year and a half after Tahoe paid RMB 793 million to buy its 49 percent interest in the combined residential and commercial project from Hangzhou-based Jiajin Real Estate Development Group. Tongren Group has already approved Tahoe’s transfer of equity in the project to Shimao, according to the statement.
The site on the northern bank of Green Mountain Lake and close to the area’s science and technology base, has a low-density plot ratio only 0.29, on which Tahoe had planned to build one of its signature Chinese courtyard homes developments.
Tahoe Project Sales Continue
Since March 22, Fuzhou-based Tahoe has sold whole or partial stakes in a total of four developments, the latest transactions included, to Shimao as it scrounges for funds to pay debt obligations due this year said to total RMB 59 billion.
As of the end of September 2018 Tahoe had RMB 17.4 billion in available cash, according to Moody’s Investors Service, making its financial health the object of analyst attention.
On March 27th Tahoe announced the sale of 40 percent stake in a Fujian real estate project to Shimao Group for an equity consideration of RMB 54 million, just tw0 days after it had sold a its Shanghai-based rival a resort project in Nanchang, Jiangxi province for RMB 1.8 billion.
The Tahoe to Shimao connection had kicked off in Hangzhou on March 25th with a RMB 378 million trade for a 51 percent stake in a 310,000 square metre commercial project in the city’s Xihu district.
Tahoe was ranked as China’s 20th largest developer last year by contracted sales, according to data from E-House’s CRIC division, with buyers signing up for just over RMB 130 billion of the company’s new properties, while Shimao placed 11th in the ranking with RMB 176 billion in new contracts.
Executives Start Disappearing
Earlier this month, a senior executive of the company, Yu Zhisheng, was said to have been detained for reasons suspected to be linked to the earlier arrest of the chairman of Shenzhen-based China Create Capital.
On April 29th Tahoe announced that its Beijing-based executive vice president, Zhang Jinyuan had resigned from the company.