Dalian Wanda Sells Failed Madrid Project at $75M Loss

After abandoning plans to renovate a Madrid landmark, Wang Jianlin’s Dalian Wanda Group has sold off the historic Edificio Espana at a loss equivalent to $75 million, according to a statement to the Hong Kong stock exchange last week.

Wanda, which also has invested in the Atletico Madrid football club, purchased the long-vacant skyscraper for €260 million (then US$358.6 million) in early 2014, with plans to renovate the 25-storey structure into a luxury hotel and shopping centre.

The Chinese developer ran into difficulties, however, when Spanish authorities raised objections to Wanda’s plan to tear down and rebuild the legally protected art deco structure. The asset disposal is the latest in a series of stumbles for Wanda, which has been among China’s most aggressive investors, as well as for Wang, who is considered to be China’s richest man.

Tear-Down Plan Ends in Tears for China’s Richest Man

Wanda Hotel Development Company agreed to sell the central Madrid building to Baraka Global Invest, a real estate investment division of Spain’s Grupo Baraka for €272 million (now $283 million), allowing the hotel subsidiary of Wanda Group to at least claim a profit in Euro terms, thanks to the sliding European currency.

Wang and Wanda had declared their intention to sell the building over the Chinese New Year holiday in February of this year, with the billionaire reportedly complaining of “being treated like a dog” by Madrid authorities.

Although Wang later denied any bitchiness, his complaint reportedly centred on the local government’s refusal to allow the total demolition of the Edifico Espana, with Wanda proposing to build a replica in its place. Prior to purchasing the building, Wanda had successfully persuaded city authorities to reduce the structure’s legal protection level, so that a new owner would only need to preserve the building’s facade.

Before Wanda jumped in, the Edificio had been vacant since 2007, when the previous owner, Spanish banking giant Grupo Santander, had run short of funds for its own planned conversion of the building.

Spanish Stumble Follows Legendary Delay

For Wanda, which has been on an expansion streak that spans from Australia, to Los Angeles to London and covers industries from hotels to amusement parks and movie studios, the problems in Madrid are the latest setback on Wang’s path to building a global conglomerate.

In November, the company’s $1.1 billion One Nine Elms project suffered a new round of delays after Wanda One UK, the mall developer’s UK arm, and Balfour Beatty failed to agree to terms on the main build contract for the London project. The prominent UK builder was the second contractor to walk away from the project after a joint venture between local construction firm Interserve and state-owned builder China State Construction Engineering Corporation bailed on One Nine Elms at the start of the year.

The London crisis followed problems in August with Wanda’s plans to fold its Legendary Pictures unit, which the company had acquired in January through what it termed a $3.5 billion deal, into its publicly listed Wanda Cinema Line. Wanda said that it will delay the integration of the Hollywood production firm until the company is profitable. Legendary reportedly lost $500 million in 2015 and was a co-producer of the recently released film The Great Wall.

Earliest this month problems also surfaced with Wanda’s $4.4 billion plan to privatise and then re-list its commercial development wing on a mainland exchange, when the project’s primary director resigned. Lu Xiaoma quit the company after would-be back-door-listing partner, Beijing Soft Rock Investment Group, backed away from the deal. Dalian Wanda Commercial Properties de-listed from the Hong Kong exchange in September, and although Wang guaranteed investors a mainland listing within two years, Wanda has yet to announce a new partner for the reverse merger scheme.