Property investment

China Vanke resumes trading after finalising Guangdong Trust purchase

PUBLISHED : Friday, 07 July, 2017, 10:56am
UPDATED : Friday, 07 July, 2017, 11:00am

China Vanke on Friday said it has resumed trading of its Hong Kong-listed shares having set out the main terms of its 55.1 billion yuan (US$8.1 billion) acquisition of certain assets of Guangdong International Trust Investment Corporation.

The country’s second largest homebuilder said its acquired assets include Guangdong Trust Real Estate, which has an assessed value of 40.44 billion yuan, creditors’ rights worth 3.86 billion yuan and Guangzhou Real Estate Branch for 378.47 million yuan. Payment will be made in four instalments finishing in February 2018.

The principal assets held by Guangdong Trust Real Estate and Guangzhou Real Estate Branch are 16 parcels of land in the Liwan and Yuexiu districts of Guangzhou. These plots are expected to be developed into residential and commercial properties, hotels and offices with a gross floor area of 2.11 million square metres.

Vanke said the bidding for the assets was conducted under the direction of Guangdong Provincial Government and Superior People’s Court.

Guangdong International Trust is known as China’s first non-bank financial institution ever to enter bankruptcy, in 1999, as a result of the Asian financial crisis as well as the biggest bankruptcy in the nation’s history since 1949.

The 16 land parcels are its most valuable assets, but the development of some has been suspended for 20 years, while others lie undeveloped, financial news outlet Caixin reported

Vanke’s shares, which were suspended on Wednesday, were up by a modest 0.1 per cent to HK$23.2 in early morning trade on Friday amid broad declines in Hong Kong’s equity market following Wall Street’s overnight retreat.

“We believe the bundle of assets Vanke plans to acquire is of good quality,” global rating agency S&P said last week.

“However, the assets are likely to require a long digestion period and will include a debt component which is yet to disclosed.”

Guangdong Trust Real Estate made a net loss before taxation and extraordinary items of 24.43 million yuan in 2016 while Guangzhou Real Estate Branch made a net loss of 349,000 yuan.