Would-be Buyer Of Evergrande's Hong Kong HQ Walks Out

Would-be Buyer Of Evergrande’s Hong Kong HQ Walks Out

HONG KONG – The proposed US$1.7 billion sale of Evergrande Group’s headquarters in Hong Kong’s Wan Chai district has fallen through after the would-be buyer, Chinese government-owned Yuexiu Property, walked away from the deal, reported Reuters last week.

According to 2 persons privy to the discussions, Guangzhou-based Yuexiu was close to concluding the acquisition in August to purchase the 26-storey China Evergrande Centre that functions as the real estate developer’s base in the Chinese territory.

However, the transaction was scuttled after Yuexiu’s board voted against the would-be acquisition due to fears that Evergrande’s ongoing debt crisis could cause potential issues in smoothly completing the deal, shared the sources.

The board of Yuexiu, which also has a presence in Hong Kong and focuses on real estate projects in the Greater Bay Area, became rattled about the acquisition’s certainty given Evergrande’s uncertain prospects, they said.

A separate source also revealed that Yuexiu received guidance from Guangzhou’s municipal government to halt the proposed acquisition at the end of August. This is because the local authorities there wanted to assess Evergrande’s overall financial situation first to better understand where it will use the proceeds if the divestment of its Hong Kong headquarters proceeds.

Previously, Bloomberg reported in August that the troubled Chinese property developer is looking to divest the commercial property for more than US2 billion amidst its debt woes.

In 2015, Evergrande Group forked out HK$12.5 billion ($1.61 billion) to buy the 345,000 sq ft harbourside office building in Hong Kong’s commercial district from Chinese Estates Holdings.

Back then, that single transaction of a commercial property established a record for the highest psf price. The office building was also the real estate developer’s most expensive asset in the financial hub.

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