Guangzhou R&F sells London’s Vauxhall Square at 42 per cent discount to valuation, posting an ‘unheard of’ loss in desperate move to pare debt

The Vauxhall Square parcel in Vauxhall has been sold for £95.7 million (US$124.8 million), at a discount of about 42 per cent to market valuation, R&F said

R&F will incur a £68.8-million loss from its Vauxhall Square disposal, the company said.

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People sit in the sunshine beside the River Thames in London on July 3, 2020. Photo: AFP

Published: 3:46pm, 15 Mar 2022Updated: 4:11pm, 15 Mar 2022

Guangzhou R&F Properties has agreed to sell a plot of mixed-use land in London at a loss to Far East Consortium International, in a move that underscores its haste to raise cash to pare its debts.

The Vauxhall Square parcel in Vauxhall has been sold for £95.7 million (US$124.8 million), at a discount of about 42 per cent to market valuation, R&F said in a statement to the Hong Kong stock exchange. The parcel, which can yield 133,000 square metres (1.43 million square feet) of gross floor space, is designated for residential, hotel and hostel, office, retail and leisure developments, R&F said.

The sale is “one of the biggest losses I have ever heard,” which is surprising because “London’s property, particular those for commercial use, are [highly] sought after by investors as there is limited supply in prime areas,” said Martin Wong, director of research and consultancy for Greater China at Knight Frank.

The desperate sale underscores how China’s biggest debtors are stripping assets to reduce their gearing, as 2022 promises to be another record year for debt defaults, particularly among the highly leveraged property developers. R&F has 331.8 billion yuan (US$52 billion) of total liabilities, compared with 270 billion yuan of saleable resources and a nationwide pipeline of properties to be launched, according to its 2021 interim report.

R&F will sell Vauxhall Square for a nominal £1, transferring £95.7 million of its intercompany debt to Far East, according to the terms of their agreement. R&F has a six-month option to repurchase the project from Far East for £106.6 million, according to the terms.

Guangzhou R&F sells London’s Vauxhall Square at 42 per cent discount to valuation, posting an ‘unheard of’ loss in desperate move to pare debt

The Vauxhall Square parcel in Vauxhall has been sold for £95.7 million (US$124.8 million), at a discount of about 42 per cent to market valuation, R&F said R&F will incur a £68.8-million loss from its Vauxhall Square disposal, the company said.

The Vauxhall Square parcel in Vauxhall has been sold for £95.7 million (US$124.8 million), at a discount of about 42 per cent to market valuation, R&F said

R&F will incur a £68.8-million loss from its Vauxhall Square disposal, the company said.