Evergrande Looking To Divest Hong Kong HQ For Over US$2bil

HONG KONG – In a bid to help pay off its massive debt, China Evergrande Group is said to be in talks to sell its headquarters in the Chinese territory, reported Bloomberg on Saturday (21 August, SGT).

According to an insider who has knowledge of the matter, China’s 2nd biggest real estate developer has entered into discussions with government-owned Yuexiu Property Company Ltd to dispose the former’s office building in Wan Chai, Hong Kong.

The 2 firms are still negotiating and nothing has been decided, said the person, who requested anonymity as the would-be transaction is confidential. More importantly, the insider shared that Evergrande has floated a possible selling price of more than US$2 billion for the office asset. Previously, the Chinese developer acquired the commercial property for HK$12.5 billion (US$1.6 billion) in 2015.

The revelation of Evergrande considering to sell its headquarters in Hong Kong comes as government regulators urge the developer to address its leverage risks. This compelled Evergrande to divest assets and speed up real estate sales to reduce debt levels.

However, the company has so far faced difficulties to rekindle confidence among suppliers, creditors, and some buyers of its residential properties, who fear the developer will have a hard time fulfilling its S$300 billion worth of liabilities.

Credit ratings agency Fitch Ratings revealed that possible sources of future funding for the developer include placements for its property management subsidiaries and listed electric vehicle arm. Another is initial public offerings (IPO) for businesses including its beverage business called FCB, as well as tourism and amusement park assets.

In a June report, Agnes Wong, a Hong Kong-based analyst with BNP Paribas SA, stated that the Shenzhen-based developer has approximately US$80 billion worth of equity in its non-property businesses that could be monetised if divested.