Just three days after announcing a plan to dispose of 40 real estate projects in China, Future Land confirmed in a filing to the Hong Kong Stock Exchange on July 24 that it has executed equity and debt transfer agreements to sell stakes in 10 project companies.
The asset sale will bring in RMB 4.15 billion ($604 million) in cash for China’s eighth-largest developer by sales, which is struggling for stability after its founder and chairman surrendered to police on charges of child molestation earlier this month.
The asset sale by Future Land’s Shanghai-listed subsidiary Seazen Holdings involves buyers from a total of 10 mainland developers, with Chongqing-based Jinke Property Group picking up more than half of the assets.
The cash income from the sale represents 13.62 percent of Seazen Holdings’ total assets at the end of 2018.
Chongqing Developer Becomes Future Land’s Biggest Customer
In its own announcement to the Shenzhen stock exchange, Jinke revealed that it is paying total compensation of RMB 1.72 billion to acquire 100 percent of the equity in six Seazen projects, including RMB 100 million in cash compensation and the remainder through acquiring liabilities owed by the project companies.
The six projects will add over 1 million square metres of gross floor area to Jinke’s portfolio in the Henan provincial city of Xucang; Jiangxi’s Shangrao; Suzhou, Anhui; Pinghu, Zhejiang; and the Shandong urban centres of Qingdao and Rizhao.
Among the remaining four projects, a Shanghai-based consortium made up of China SCE Group, Powerlong Real Estate and CIFI Group paid RMB 192 million to acquire a 24 percent stake in a 72,300 square meter residential development in the trading centre of Yiwu in Zhejiang province.
China SCE also made a solo buy — acquiring 100 percent of a 48,600 square metre project in Jiashan, Zhejiang for RMB 60 million.
Another Shanghai builder, Singapore-listed Yanlord Land added one more Yangtze River Delta project to its portfolio by paying RMB 1.28 billion to take an 85 percent stake in a development in Changshu, Jiangsu province.
Chongqing-based Longfor also took the opportunity to add to its pipeline by acquiring 100 percent of a 107,200 square meter project in Taiyuan, Shanxi for RMB 905 million.
Future Land Aims for Stability
The set of transactions was announced on the same day that parent company Future Land declared in a separate statement that it would stick to its long term development strategy by focusing on residential and commercial projects while, “systematically optimizing Seazen Holdings’ asset and liability structure to achieve stability and high-quality development of Seazen Holdings to protect the interests of all investors and related parties of Seazen Holdings.”
Earlier this month, the former chairman of Hong Kong-listed Future Land was detained on charges of molesting a nine-year-old girl, prompting media speculation of a sell-off of 68 developments by the company.
Future Land, now chaired by 31-year-old Wang Xiaosong after his father, Wang Zhenhua, was jailed by the Shanghai police, also reconfirmed in its statement to the Hong Kong exchange that the company was keeping in place its existing 2019 sales target of RMB 270 billion and intended to achieve stable sales targets in 2020 and 2021.
The developer also said that its “existing land reserve will be optimized so that funds will be recovered to control the scale of its liabilities,” reconfirming the potential for further sales of projects out of its pipeline.