Chinese developer sells Nine Elms project for huge loss Business

A luxury housing project at the heart of London’s Nine Elms site has been sold by its indebted Chinese developer for a loss of £62million.

R&F Properties has unloaded the Vauxhall Square site, which has planning permission for two large office buildings and 42 and 58 storey twin towers which will have a total of 578 apartments when completed.

R&F will sell the south London site for a nominal £1, transferring £95.7m of debt to Hong Kong rival Far East under the terms of the deal. The sum is about 42% less than the market value of the project.

As part of the deal, R&F has a six-month option to buy the Far East project for £106.6 million.

Martin Wong of Knight Frank estate agents told the South China Morning Post it was “one of the biggest losses [on a sale] I’ve already heard”.

R&F prime contractor Multiplex shot down tools at Nine Elms earlier this year over a payment dispute. Work resumed two weeks later following an agreement between the two parties.

The Chinese developer was one of the most affected by Xi Jinping’s “three red lines” policy, which forced property developers to reduce their debt following an increase in liabilities in the sector.

R&F has struggled to make bond payments in recent months, having extended deadlines for some offshore bonds. Fellow Chinese developer Evergrande defaulted on the bonds as creditors threatened to take enforcement action.

The Telegraph reported in November that R&F had struggled to sell apartments in Nine Elms, with less than one in 15 homes sold in the first year on the market.

More than half of initial sales from R&F’s joint venture with CC Land were to related parties, according to filings by the companies in Hong Kong. R&F said this is no longer the case after further sales in 2021.

Fewer than 100 properties were sold in the first three years of presale to the CC Land and R&F joint venture, which has been championed by local authorities as key to the regeneration of the area.

Boris Johnson endorsed the regeneration of Nine Elms when he was Mayor of London, describing it as “the final piece of the puzzle” for central London.

R&F Chairman Li Sze Lim said, “The divestment is beneficial to the group by optimizing resource allocation, increasing its capital reserve and reducing its debt ratio, which is conducive to its ability reduce risk and achieve stable and stable long-term goals. healthy development.”

R&F UK has been contacted for comment.

It came as Hong Kong stocks posted their biggest rally since 2008 after Beijing pledged to support the Chinese economy and markets following a two-day rout.

Chinese Vice Premier Liu He has vowed to adopt market-friendly policies to boost its economy as widening lockdowns to contain the surge in Covid cases cloud the outlook.

It also eased investor fears of a regulatory crackdown on technology and signaled an easing of pressure on China’s struggling real estate sector.

The Hang Seng Index in Hong Kong climbed 9% to its best day in 14 years, helping the index rebound from a six-year low.

Shares in Shanghai rose more than 4% in the biggest gain in nearly two years.

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This notice was published: 2022-03-16 12:38:34

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