China’s Shimao Group, a property developer has joined smaller peer Agile Group to sell its stake in the Guangzhou complex to China Overseas Land & Investment, a state-owned partner in a move aimed at slashing its debt.
Late on Monday, Shimao, which held a 26.7% stake in the Guangzhou Asian Games City, the same as Agile, said it has sold its holdings to joint venture partner COLI for $290.65 million (1.84 billion yuan).
Agile has also made a similar announcement earlier in the day.
Earlier Shanghai-based Shimao had defaulted on a loan repayment to a trust, and has extended some asset-backed securities payments this month; it said it would consider selling more of its properties to slash its debt.
Following the sale, COLI’s stake in the Guangzhou Asian Games City will increase from 20% to 73.3%, said the company in a regulatory filing saying the purchases were good opportunities for it to “further strengthen its property development business”.
The Guangzhou Asian Games City is a residential and commercial complex with a total construction floor area of 5.9 million square metres.
Stringent regulatory curbs on borrowing has driven China’s property sector into crisis, with China Evergrande Group being the poster boy of the crisis. The company was once China’s top-selling developer, but it has now been reduced to the world’s most indebted property company.
In a statement Shimao said, last week, it had sold a commercial land in Shanghai for 1.06 billion yuan to a company owned by the Shanghai municipal government.
On Tuesday, shares of Shimao rose by 3% while that of COLI fell by 1.1%.
($1 = 6.3306 Chinese yuan)