"'Bankruptcy Crisis' Evergrande... HK$2 Trillion Hong Kong Building Sale Falls Through"

[Image source=Yonhap News]

[Asia Economy Reporter Yuri Kim] It has been revealed belatedly that the planned sale of a HKD 2 trillion Hong Kong regional headquarters building by Chinese real estate developer Evergrande Group, which is in the process of selling assets to secure liquidity, has fallen through.

Major foreign media reported on the 15th that Weshou Real Estate, a Chinese state-owned enterprise, had considered purchasing the building from Evergrande for $1.7 billion (approximately 2 trillion KRW), but withdrew its purchase intention due to concerns over Evergrande's financial condition. Weshou Real Estate reportedly came close to closing the deal in August, but the company's board raised concerns about Evergrande's potential failure to fulfill the contract, resulting in the sale not being completed.

Evergrande's Hong Kong regional headquarters is a 26-story building constructed on a 32,000㎡ site in the port commercial district. A source said that Weshou Real Estate was instructed by the Guangzhou city government in Guangdong Province to halt purchase negotiations at the end of August. It was also reported that the authorities in Guangzhou, where Weshou Real Estate's headquarters are located, judged that they needed to first review Evergrande's financial status.

Evergrande purchased the Hong Kong regional headquarters building in 2015 for HKD 12.5 billion (approximately 1.9 trillion KRW), marking it as the building with the highest price per unit area in Hong Kong. It is also the most expensive single asset Evergrande owns in Hong Kong.

However, Evergrande raised HKD 10 billion (approximately 1.5 trillion KRW) at that time in the form of securitized products. Therefore, even if the contract had been completed, the actual cash Evergrande could secure was known to be limited.

As of the end of June, Evergrande's total assets were reported to be 2.38 trillion yuan (approximately 438 trillion KRW), while total liabilities stood at 1.97 trillion yuan (approximately 363 trillion KRW), and it has already failed to pay interest on international bonds three times.

Evergrande has recently been securing funds by disposing of real estate and shares of affiliates. Regarding the suspension of trading of Evergrande Group shares listed on the Hong Kong stock exchange earlier this month, local economic media reported that Evergrande is negotiating the sale of a 51% stake in Evergrande Property, its real estate management affiliate. Major foreign media reported that the negotiations are in the final stages and the sale amount could reach HKD 20 billion (approximately 3 trillion KRW).

This content was produced with the assistance of AI translation services.