
SRE has been caught up in the troubles of its parent, China Minsheng Investment Group
SRE Group has agreed to sell its entire 51 percent interest in a Shanghai residential and commercial project for RMB 3.41 billion ($470 million) after putting the ownership stake up for bid nearly four years ago.
The transaction will put the development at 717-719 Daxing Road in Huangpu district under the full control of the buyer, mainland real estate firm Zhongchong Investment Group, which already holds the remaining 49 percent stake in the project company, SRE said Monday in a filing with the Hong Kong stock exchange.
The unit of troubled China Minsheng Investment Group expects to book net proceeds of RMB 3.37 billion on the sale after making a payment to settle a loan dispute with a creditor, Ningbo Zhongqing. The transaction is to be completed in three instalments and remains subject to shareholder approval at a special general meeting.
“The proceeds from the disposal will enhance the company’s cash flow position and offer a solution to resolve the syndicated loan and the guarantees provided by the group, reduce the overall debt levels, replenish general working capital, and mitigate legal and operational risks currently faced by the group,” SRE chairman Qin Guohui said in the filing.
Home Sales in Limbo
In May 2020, SRE posted its 51 percent stake in the high-end residential, retail and office development, then known as Shanghai Rich Gate I, on the Shanghai United Assets and Equity Exchange public marketplace at a reserve price of RMB 1.8 billion ($250 million).

SRE Group chairman Qin Guohui
Spanning eastward to Yingxun Road in what was once the old quarter of the city, Shanghai Rich Gate I was approved for development of 72,660 square metres (782,106 square feet) of housing, 48,600 square metres of offices and 9,244 square metres of retail space.
The project is unable to begin sales until local authorities issue a pre-sale certificate, which is anticipated to be obtained in 2026, according to SRE.
The move to sell Shanghai Rich Gate I came less than two weeks after SRE announced an attributable loss for 2019 of RMB 2.3 billion. At the time, the group was in default on RMB 200 million in loans, which became payable immediately after being “triggered by the deterioration of the financial conditions” at China Minsheng.
In addition, RMB 1.2 billion in long-term bank borrowings became immediately payable on demand as a result of the 2020 arrest of SRE’s former chairman, Peng Xinkuang, on embezzlement charges.
Delayed Reporting
SRE’s most recently published financial results, for the year 2022, revealed a loss of RMB 268 million that reversed a prior-year profit of RMB 38 million.
The developer has yet to report its interim or full-year results for 2023, indicating in a filing last month that it expected to release them by the end of April. The group blamed the delay on the extra time needed to get new auditor ShineWing up to speed after SRE declined to reappoint PwC in the role over a reported pay dispute.
SRE’s Hong Kong-listed shares have been suspended from trading since 3 April of last year after the group was late in reporting its 2022 results.
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