Wanda Sells Shanghai Bund Hotel to Indonesian Billionaire Tanoto’s Pacific Eagle

Embattled mainland developer Dalian Wanda Group has sold its Wanda Reign on the Bund hotel in Shanghai to the family office of Indonesian pulp and paper billionaire Sukanto Tanoto in a rare purchase of a mainland hotel asset by a foreign investor.

The luxury hotel located in a southern extension of Shanghai’s famed Bund waterfront was acquired last month by a unit of Singapore-based Pacific Eagle Real Estate, the property investment and development arm of Tanoto’s family office, a Pacific Eagle representative confirmed to Mingtiandi.

“As a long term investor, Pacific Eagle Real Estate is acquiring Shanghai Wanda Reign on the Bund Hotel for capital appreciation,” Pacific Eagle’s spokesperson told Mingtiandi.

While the acquisition price was undisclosed, Mingtiandi has learned from market sources that the asset changed hands at a price estimated at RMB 1.44 billion to RMB 1.66 billion ($204 million to $234 million).

Sold for 2011 Site Price

Wanda is selling the hotel at nearly the same RMB 1.7 billion price at which the company had reportedly acquired the waterfront site in 2011. Including the site acquisition, Wanda had reportedly invested RMB 3.4 billion ($516 million) in the property, making it the most expensive hotel ever built in China, according to local media.

Wanda had reportedly been shopping the hotel since at least May 2023, with Chinese conglomerate Fosun, which owns the Shanghai Bund Finance Center where the hotel is located, said to have been in discussions to acquire the asset, although no transaction followed those reported talks.

Opened in June 2016, the 193-key hotel spans 36,000 square metres (387,501 square feet) of floor area, with standard rooms starting at 45 square metres and suites ranging as large as 288 square metres. The reported transaction price represents a price per key of RMB 7.5 million to RMB 8.6 million, or RMB 40,000 to RMB 46,111 per square metre.

Billed as Shanghai’s first “seven-star” hotel, the property has received publicity for its lavish decor and over-the-top opulence including personalised butlers, Rolls Royce car service, and an on-site KTV room. Situated opposite the Shiliupu Marina along Zhongshan Road, the property boasts views of the Bund, the Lujiazui skyline and Yu Garden.

Positioned as Wanda’s answer to Hilton’s Waldorf Astoria and Marriott’s St. Regis and Ritz Carlton, the flagship hotel was the third location under Wanda’s Reign brand of ultra-luxury hostelries after Wuhan and Chengdu.

According to local media, the hotel is set to retain the Wanda brand after the transaction and will continue to be managed by the company’s hotel division. Following the sale, Wanda will own six hotels in its portfolio.

The transaction was one of two sales of Shanghai luxury hotels in December 2023, with indebted state-owned builder Overseas Chinese Town agreeing to sell the Bulgari Hotel to Jiangsu Jinfeng Cement Group for RMB 2.43 billion ($344 million) in a deal announced the day after Christmas.

“In the current market, there are virtually no foreign buyers pursuing mainland hotel assets. The very few exceptions like RGE are betting that the hospitality sector has bottomed and operating performance will improve going forward, similar to where Japan was a year ago,” said Jimmy Gu, co-head of capital markets and investment services at Colliers in China, adding that foreign buyers would likely view any hotel acquisition as a long-term investment.

Betting on China

The hotel marks the fourth addition to Pacific Eagle’s mainland China property portfolio, which also includes the 21-storey Pacific Eagle Center office tower in Beijing, which was developed as a joint venture with state-owned China Resources Capital, as well as a Beijing office park project and a residential development in the Shandong provincial city of Rizhao.

Outside of China, the company in 2022 acquired the Tanglin Shopping Centre in Singapore’s Orchard Road area from the strata-titled asset’s owners for S$868 million ($645.6 million).

Pacific Eagle’s Singapore portfolio also includes the 302-key Mondrian Singapore Duxton hotel, which was developed on the site of the former Chinatown Plaza after the company acquired that complex in 2018, as well as three adjoining plots on Bukit Timah Road near Singapore’s Botanic Gardens, which the company has marked for residential and commercial development.

Pacific Eagle also has two office assets in London and an office building in Munich.

Founded by Tanoto in 1973 as a plywood panel manufacturer, RGE Group has evolved into a multi-national conglomerate with $35 billion in total assets and operations in Indonesia, China, Brazil, Spain, and Canada. The group’s main lines of business include pulp and paper, palm oil, and oil and gas.

RGE has increased its mainland investments since entering the market in the 1990s, with China now accounting for nearly half of the group’s total sales, according to local media accounts. Last month, RGE offered to acquire Chinese tissue maker Vinda International for $3.3 billion.

Tanoto, who was born in Indonesia and is of Fujianese descent, currently ranks 20th on Forbes’ list of Indonesia’s wealthiest people with a net worth of $3.15 billion.

Wanda Winding Down

The hotel sale is the latest move by Wanda Group to raise capital, as the company grapples with a deepening property downturn in China that has placed mounting funding pressures on the developer and its peers with defaults becoming commonplace.

Last month, Wanda’s billionaire chairman Wang Jianlin ceded control of his mall development business, with Hong Kong-based private equity firm PAG and other investors increasing their combined stake in Zhuhai Wanda Commercial Management Group to 60 percent. Wang, who built Wanda into China’s largest mall developer, saw his holding reduced to 40 percent from 78 percent.

Wanda has also embarked on a series of asset sales to shore up its finances, with the company selling four Wanda Plaza malls across Shanghai, Guangzhou, Taicang, and Huzhou last month to Beijing-based REIT manager GSUM Fund Management. Those disposals followed the company’s sale of malls in Shanghai, Xining, and Jiangmen to mainland insurer Dajia Insurance Group earlier in 2023.

Wang also agreed last month to sell control of the group’s once ambitious film business to China Ruyi.

Note: An earlier version of this article indicated that Pacific Eagle Real Estate is part of RGE Group. It has been updated to show that the company is part of  Tanoto’s family office. Mingtiandi regret the error.