China Vanke puts plot in Shenzhen up for auction
Cash-strapped developer China Vanke is putting more of its fringe assets up for sale to stave off a liquidity crisis and pare US$147 billion of liabilities, after a multiyear slump in home sales weakened its finances and perceived creditworthiness.
The home builder will auction a plot of land in its home base in Shenzhen at a starting price of 2.2 billion yuan (HK$2.4 billion), according to a listing on Shenzhen Public Resources Trading Centre. The bidding will start on May 18, it added.
Vanke bought the 19,227 square metre site in Nanshan district in December 2017 for about 3.1 billion yuan, according to past auction information.
“The listing of this land plot is part of the company’s move in a basket scheme [to dispose of its noncore assets],” Vanke said in a written comment.
Vanke and many of its peers have struggled to appease lenders and creditors as home sales slumped since China imposed its “three red lines” policy, pushing the nation’s weakest builders into a financial crisis.
Vanke had 1.1 trillion yuan in total liabilities on March 31, according to its latest financial report to shareholders, including 248 billion yuan of bank loans and borrowings, and 74.2 billion yuan of outstanding bonds. Moody’s cut Vanke’s credit rating to junk in March, citing debt repayment pressure.
Its earnings tumbled 46 per cent to 12.2 billion yuan in 2023. The state-backed developer has said the rating downgrade was manageable and that the firm remained financially sound.
At a meeting with shareholders a week ago, chairman Yu Liang said he was leading the group through a three-pronged strategy to trim debt, exit noncore business and reassess its funding strategies.
The land auction comes amid increased efforts to convert its noncore assets into cash, including the sale of its 50 per cent share in Qibao Vanke Plaza in Shanghai to Hong Kong-listed Link Reit for US$331 million in February, and its stake in Banyan Tree hotel chain in mainland China for US$67 million in December.