Wanda Hotel Unit Changes Hands for $470M Amid Restructuring Drive

Chinese billionaire Wang Jianlin is continuing to restructure his commercial property empire, by personally purchasing a controlling stake in Dalian Wanda Group’s Hong Kong-listed hotel unit for HK$3.67 billion ($470 million).

Through the proposed transaction, a vehicle wholly owned by Wang will buy a 65 percent stake in Wanda Hotel Development Company from Wanda Commercial Properties Overseas, which is majority owned by Wang, at HK$1.20 per share.

The move is expected to improve the balance sheet of  Wanda Commercial Properties, the heavily indebted development firm which wholly owns Wanda Commercial Properties Overseas, as part of a planned asset reshuffling that Wanda first announced in August.

Wang To Buy Control of HK-Listed Unit

The proposed transfer, which is slated to be executed by January 31, was announced Monday to the Hong Kong exchange. The filing indicates that Wang will remain the ultimate controlling shareholder of Wanda Hotel Development following the deal.

According to the statement, Wanda Investment Holding Co Ltd — which is 100 percent owned by Wang — has signed a non-binding letter of intent to purchase a controlling stake in the hotel subsidiary from Wanda Commercial Properties Overseas (which is about 60 percent owned by Wang).

The ownership swap is the latest step in a restructuring effort that began when Wanda announced a proposed deal, under which Wanda Hotel Development would sell stakes in a horde of overseas projects to Dalian Wanda Commercial Properties — the group’s main property development arm — while buying over $1 billion in theme park and hotel assets.

Under that agreement, Dalian Wanda Commercial Properties would buy up Wanda Properties Investment, which through its subsidiaries owns stakes in nearly $4.5 billion in real estate projects in China, Australia, London and Chicago. The move is believed likely to be an intermediate step in Wanda ultimately selling off its interests in those property projects, which Wang scooped up during the country’s 2012 to 2016 outbound investment spree.

The proposed deal followed the sale of most of Wanda’s domestic theme park and hotel assets to Sunac China Holdings and Guangzhou R&F Properties in a $9.4 billion transaction in July.

Offshore Fire Sale Could be in the Offing

Then in September, Wanda Hotel Development said it would purchase hotel operator Wanda Hotel Management from Dalian Wanda Commercial Properties for HK$878 million ($112.4 million) in cash – an acquisition that Wanda Hotel shareholders are scheduled to vote on this coming Friday.

The deal did not include the sale of the overseas properties or the purchase of the group’s theme park management arm from Wang-controlled Beijing Wanda Culture Industry Group for RMB 6.3 billion ($945 million), which had been proposed the previous month.

Wanda Hotel said last month it was open to “business opportunities” relating to its overseas portfolio, while saying no sale talks were underway. The statement followed a report in the South China Morning Post that the conglomerate was hawking its $5 billion in foreign real estate assets.

While it is not clear how Wanda Hotel’s proposed change of ownership will affect the progress of this potential asset sale, the move should help to shore up the finances of Wanda Commercial Properties, which had total debt of RMB 279 billion ($42.17 billion) as of end-June, according to ratings agency S&P.

Wanda has been under pressure to offload assets and pare down debt since its high-profile acquisitions become suddenly unpopular with China’s regulators this summer.