ExplainerWhat price can China Evergrande expect for its Hong Kong headquarters? Certainly not US$2 billion, say analysts

Evergrande bought the 26-storey office tower in Wan Chai from Chinese Estates Holdings for HK$12.5 billion (US$1.61 billion) in 2015

Cash-strapped developer is said to be in talks to sell the asset to Guangdong-based Yuexiu Property for US$2 billion, media reports say

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The China Evergrande Centre in Hong Kong’s Wan Chai district offers harbour views. Photo: AFP

Published: 3:17pm, 24 Aug 2021Updated: 11:55am, 15 Sep 2021

China Evergrande Group is rushing to sell assets to repair its balance sheet. Under state pressure to strengthen its balance sheet, the developer has held talks to sell its interest in Hong Kong-listed car-making unit and property management arm.

The Shenzhen-based firm is seeking to sell the 26-storey China Evergrande Centre in Wan Chai that serves as its headquarters in Hong Kong to mainland peer Yuexiu Property, Bloomberg and other mainland media reported last week.

The trophy building, bought from Chinese Estates Holdings in 2015, is China Evergrande’s single largest asset. Selling the harbourside property in Wan Chai will help boost its liquidity, which is vital to meeting one of the Chinese central bank’s “three red lines” deleveraging campaign.

Here’s why billionaire founder and chairman Hui Ka-yan is trying to save his property empire.

What is behind Evergrande’s financial stress?

Hui’s flagship is regarded as the world’s most-indebted developer some yardsticks. The group had 1.95 trillion yuan (US$301 billion) of total liabilities at the end of 2020, according to its latest financial accounts. They included 716.5 billion yuan of interest-bearing borrowings, which has since been trimmed to 570 billion yuan in June, according to a press statement.