Wanda Denies Reported Fire Sale of $1.5B in Aussie Projects

Dalian Wanda Group, China’s largest commercial property developer, has denied reports that it is seeking an exit from its two flagship Australian projects totalling $1.5 billion, amid a regulatory crackdown on overseas investment.

Sources told The Australian Financial Review that Wanda is in negotiations to sell the A$1 billion ($791 million) One Circular Quay apartment and hotel tower on Sydney Harbour, and the A$900 million ($712 million) Jewel resort on the Gold Coast, according to a Monday report in the newspaper.

Wanda’s listed hotel subsidiary promptly issued a statement on Tuesday to the Hong Kong stock exchange denying the claim and stating that Wanda has no plans for the disposal of the projects.

The reported asset disposal moves come just a few weeks after Wanda was targetted by Chinese authorities seeking to stem a rapid outflow of capital from the country’s dwindling foreign exchange reserves. Just last week, Anbang Insurance Group, another major mainland investor denied reports that it was under pressure from regulators to sell its portfolio of overseas assets.

Wanda Pours Cold Water on Claims of Impending Sale

“Having made such enquiries internally as is reasonable in the circumstances, the company wishes to clarify that, as of the date of this announcement, the company does not have any plan to make the said disposals referred to in the media reports, and thus such information is incorrect,” Wanda Hotel Development Company said in the stock exchange statement. “Both projects are progressing as planned.”

The landmark Sydney project, One Circular Quay, is close to launching sales of its 190 luxury apartments, and a five-star hotel with 181 suites is under development. According to an account in The Australian Business Review, a number of local and international firms are preparing formal offers for the project, but sources based in Hong Kong told the newspaper it’s unclear whether the property is even available for sale.

Wanda’s Jewel resort at Surfers Paradise along the Gold Coast is said to be on track for completion by 2019.

Reports one year ago indicated that that the integrated resort project was making few sales, with only 25 percent of condo units being sold in the first year that they were available. One year later, Wanda says that one-third of the 512 units have already been sold. A hotel is being developed in a separate building of the beachfront complex.

An executive at Wanda’s local Sydney unit reiterated to the media that the company was not fielding offers for the projects and that construction work was on track. “News reports that Wanda is fielding offers to sell the two real-estate projects in Australia are completely false,” said John Wei, managing director of local unit Wanda One Sydney in a statement to the The Australian Business Review. “Wanda has never had any negotiations with any party. The construction of the two projects is moving forward smoothly, and apartment sales remain strong.”

Chinese Builder Makes a Splash in Coastal Australia

Wanda made its Aussie debut in August 2014, revealing it would form a Wanda Australia entity with funding of up to HK$12.5 billion ($1.57 billion) to pursue opportunities in the country. For its first investment, the developer bought 55 percent of the Surfer’s Paradise resort project from China’s Ridong Group for A$300 million ($278 million).

The following January, Wanda picked up the harbour-front site in Sydney, marking the company’s second major Australian deal. The developer controlled by tycoon Wang Jianlin purchased the Gold Fields House office tower from Blackstone for A$415 million ($329 million) as well as picking up the adjacent Fairfax House from a pair of Chinese-owned property firms for $A73 million ($57.8 million). Construction of the One Circular Quay mixed-use complex containing a Wanda Vista hotel, luxury flats and boutique retail space is slated to begin next year.

Tightening Investment Controls Fuel Sale Speculation

Wanda is among a group of prominent mainland firms that have come under fire for their debt-fueled overseas acquisitions. After a five-year deal binge that saw Wanda scoop up trophy real estate, film studios and sports firms around the world, the Beijing-based conglomerate suddenly found itself in the crosshairs of a regulatory crackdown along with major investment players Anbang Insurance Group, Fosun International, and HNA Group.

President Xi Jinping reportedly signed off on a disciplinary measure in June that banned Wanda from receiving additional loans for six overseas entertainment projects, and Wang indicated that he would confine the company’s major acquisitions to China in the future. Then in July, Wanda sold a portfolio of 77 hotels to Guangzhou’s R&F Properties and 13 tourism projects to Sunac China, for a total of RMB 63.7 billion ($9.4 billion) in China’s biggest-ever real estate deal.

Just last week Anbang Insurance, whose chairman Wu Xiaohui disappeared into government detention in early June, dismissed an unconfirmed Bloomberg report that Chinese authorities are pressuring the firm to sell off its more than $10 billion portfolio of foreign assets, including New York’s Waldorf Astoria, and bring the proceeds back to the mainland.