R&F Properties turns to Hong Kong tycoon in distressed sale of London asset to trim part of US$42 billion in liabilities
- Guangzhou R&F is selling a UK asset to Hong Kong property tycoon Cheung Chung Kiu to help pare debt and other missed payments
- Cheung’s vehicle is expected to ask bondholders to swap as much as US$5.7 billion of existing bonds into new perpetual debt as part of the transaction
The developer has agreed to sell its UK asset known as the Nine Elms development, a prized mixed-use residential and commercial project in central London, for a token sum of HK$1 plus debt, it said in an exchange filing. The buyer, London One Limited, which is solely owned by Cheung, will assume at least US$800 million of the loan related to the transaction.
“In recent years, the group has expedited its plan to sell development and investment properties in both China and overseas,” R&F said in its exchange filing. Nonetheless, certain loans have become “increasingly difficult to repay”, justifying the need to sell the London project, it added.
R&F expects to sell more assets to help reduce more than 300 billion yuan (US$42 billion) of total liabilities it carried at the end of June 2023. Bank borrowings and bonds made up more than 45 per cent of them. The developer has missed payments on more than 34 billion yuan of debt, according to its latest financial report to shareholders.
CC Land confirmed in an email to the Post that Cheung is the buyer of the UK asset in his personal capacity. Cheung was reported in 2020 to have bought a 45-room mansion in Knightsbridge for £210 million (US$265 million), a record price for a country house in the UK capital.
London One Limited, Cheung’s special-purpose vehicle, is buying R&F’s unit known as Easy Tactic, which owns the UK asset and has three outstanding dollar-denominated bonds worth US$5.7 billion, due in July 2025, July 2027 and July 2028. He is planning to ask bondholders to swap them into new bonds with no maturity dates.
R&F’s project is a £1.34 billion development slated for completion in April 2024, according to its filing. Upon completion, it will comprise two towers offering 437 private residential units and 57 affordable housing units, along with a hotel in one of the towers.
In 2021, the Wandsworth Borough Council described the transformation of Nine Elms from “dirty and unloved industrial wasteland into London’s fastest growing and most vibrant residential and business district”, adding that it would be “the biggest urban renewal success story this century”.
The regeneration of the area would build 20,000 new homes and create 25,000 permanent jobs. An estimated 33,000 residents were also expected to live in the district by the end of the decade, the statement added. In total, it would have 3.2 million square feet of office space, 2.3 million sq ft of retail premises and 1,600 hotel rooms.
Founded in 1994, R&F is among major Chinese developers that have ventured beyond the mainland, many funded by excessive borrowings. The developer rolled out a global strategy in 2013 and has operations stretching from Malaysia to Cambodia, South Korea and Australia.
Additional reporting by Yulu Ao and Daniel Ren
