Dalian Wanda Group last week announced that it had agreed to sell its 90 percent stake in a Chicago property project for $270 million, closing out the last of an overseas property portfolio that once included projects in the US, UK, France, Spain and Australia.
Wanda Hotel Development, the Hong Kong-listed unit of billionaire Wang Jianlin’s property group said in an announcement to the HKEX that it is selling its stake in the 101-storey Vista Tower to Magellan Group, which through the transaction will regain full ownership of the incomplete residential, hotel and commercial complex some six years after selling the 90 percent holding to Wanda.
On paper, Wanda will generate a net gain of HK$94 million ($12.1 million) before taxes, according to its statement, which indicated that the proceeds will be used to pay down debt.
Wanda Group had total debts of nearly RMB 20 billion ($2.9 billion) by the end of March, including RMB 12.2 billion in short-term liabilities, according to the latest report by local ratings agency China Chengxin International Credit Rating.
Wanda Continues to Offload Overseas Projects
From 2012 through the beginning of 2017, the company helmed by China’s one-time richest man invested as much as RMB 245.1 billion ($35 billion) buying up overseas assets, according to a tally by mainland news site the Paper.
During a “go global” spree which saw companies such as HNA, Greenland Group and Anbang Insurance become leading buyers of trophy projects, Wanda snatched up European football clubs, properties in Beverly Hills, Hollywood studios and US theatre chain AMC Entertainment.
Since China’s leadership began restricting use of foreign exchange for cross-border real estate deals in 2016, however, the real estate giant has been offloading its overseas investments, including selling off its Australian projects in January 2018.
During the 15 months starting in July 2017, the group paid off about RMB 216 billion ($31 billion) of liabilities, reducing its debt level by around one-third, after the central government began pressuring large corporations to cut borrowing and reduce the risk of potential market calamities.
Wanda’s primary unit, Dalian Wanda Commercial Management Group, which manages core assets including hotels, shopping malls and other properties, had total debts of RMB 297.9 billion by the end of 2019, more than four times its cash and cash equivalents, according to the company’s filing in April this year.
Exiting the US Market
The Chicago investment was Wanda’s second major property investment in the United States, with neither of the company’s projects having reached completion to date.
In November of 2018 the developer agreed to sell its One Beverly Hills project in Los Angeles for a reported $420 million, after buying the site for the same figure in 2014 for what it described as a $1.2 billion hotel and retail project.
In March Wanda sold off Ironman Group, which operates the triathlon series bearing the same name, to Advance Publications for $730 million after the sports marketing firm suffered 2019’s second-worst NASDAQ debut.
Wanda first entered the US market by purchasing the AMC Theatre chain for $2.6 billion in 2012, with the cinema operator reported to be nearing a deal with investment bank Silver Lake early last month that would help it avoid bankruptcy. On 24 July AMC said that it plans to reopen 450 locations across the US in mid to late August as the COVID-19 crisis crimps operations.