Sino-Ocean Group Selling Beijing Mall to Mainland Retailer for $50M

Sino-Ocean Group has agreed to sell a Beijing shopping centre and the property’s parking area for a total of RMB 359.2 million ($50.6 million), as the state-backed Chinese developer continues a string of asset disposals in the wake of last year’s multibillion-dollar loss.

Sino-Ocean will grant the right of first refusal to buy Ocean We-Life Plaza Beijing to Easyhome, a Shenzhen-listed retailer, for a consideration of RMB 348.8 million, the group said Monday in a filing with the Hong Kong stock exchange. Easyhome will also acquire the mall’s 53 parking spaces for RMB 10.3 million.

The builder led by chairman Li Ming said the deal would let Sino-Ocean “crystallise the value and its investment towards the development of the property” and generate positive cash flow to replenish the working capital of the group.

“A net gain before tax of approximately RMB 316,163,000 (subject to audit) is also expected to be recognised from the transactions, thereby increasing the return for shareholders of Sino-Ocean Group,” the company said in the filing.

Air Defence in the Bargain

Ocean We-Life Plaza comprises 62,398 square metres (671,646 square feet) of gross floor area on land spanning 35,887 square metres in Beijing’s Chaoyang district, the locale of many foreign embassies in China. The 2013-era mall’s project company had an unaudited net asset value of RMB 578.3 million as of April.

The 53 parking spaces, which are held by the Sino-Ocean Service unit, have a GFA of 2,580 square metres and a book value of RMB 4.9 million.

The deal also includes the transfer of use rights for the property’s ancillary civil air defence facility, for which no separate consideration or book value was designated.

All procedures in respect of the change of owner of the use rights for the 16,691 square metre facility are to be completed within two years after the project company’s sale, Sino-Ocean said.

Dumping Assets

Sino-Ocean, which is controlled by state-run insurers China Life and Dajia Insurance, suffered a net loss of RMB 15.9 billion ($2.3 billion) in 2022 amid an overall slowdown in China’s real estate market and the continued impact of the COVID-19 pandemic.

China’s 20th-largest developer by contracted sales squeezed out cash by selling off a number of assets last year, including agreeing to sell its half-stake in Sino-Ocean Taikoo Li Chengdu to its partner, Swire Properties, for RMB 5.5 billion in December. That sale reflected a 10 percent discount from the property’s valuation.

Last October, Sino-Ocean raised RMB 230 million by selling its remaining 10 percent stake in the China Life Financial Centre office tower in Beijing to two units of its largest shareholder, China Life.

Bloomberg reported in early May that the group’s Sino-Ocean Capital affiliate had proposed to delay an interest payment to October instead of April for a set of 6 percent dollar notes maturing in October this year. The plan would require approval from creditors holding at least 75 percent of the note’s outstanding value, Bloomberg said, citing a consent solicitation document.

Sino-Ocean reported contracted sales of RMB 7 billion in April, up from RMB 6.8 billion a year earlier, with contracted sales GFA of 543,300 square metres, up from 436,900 square metres in the same month a year ago.