Future Land offloads eight projects to Jinke Property for US$400 million as it reels from arrest of ex-chair Wang Zhenhua for alleged child sex abuse
- The disposals will yield only US$80,000 in profit and will have no impact on 2019 results, the firm says
- The Shanghai-based developer whose former chairman was detained on a charge of child molestation says proceeds will strengthen its balance sheet
Future Land Development, the Chinese builder whose former chairman was arrested on suspicion of molesting a child, has sold eight real estate projects to various subsidiaries of Shenzhen-listed Jinke Property Group for a total of 2.74 billion yuan (US$400 million).
The troubled company said in an exchange filing on Sunday evening that the disposal to Jinke, which is principally engaged in residential development, technology investment and cultural tourism, also involved shareholder loans tied to the projects. Future Land said it will continue to get repayments from the loans.
Future Land will make a profit of just 550,000 yuan (US$79,950) on the sales, which it said it would use as general working capital.
The developer is reeling from the shock arrest of Wang Zhenhua, its controlling stakeholder and one of China’s richest men in early July, for allegedly sexually assaulting a nine-year-old girl.
Its shares have plunged in the wake of the scandal, wiping out HK$14.86 billion (US$1.9 billion) in market value. The share price is currently at its lowest since the firm’s 2012 Hong Kong IPO.
Last week, Future Land announced it was in talks to offload 40 projects in China to smaller developers, including Jinke.
The eight projects in today’s announcement are all newly acquired residential developments that are not ready for sale, and are located in various provinces that include Shandong, Henan, Zhejiang and others.
“The disposals will increase the company’s monetary funds, improve the asset liability structure … and strengthen its ability to repay debts,” it said. However, the disposal will not have a material impact on its 2019 financial performance, Future Land added.
It said the sale will not affect any of its current projects, adding that its contracted sales target for the year remains at 270 million yuan.
The Shanghai-based property developer a 19 per cent rise in contracted sales in June from the previous month, totaling 29.5 billion yuan covering an area of 2.53 million square metres. For the period from January to June, contracted sales reached 122.4 billion yuan, up 28.4 per cent from a year ago.