R&F sells stake in London project to Cheung Chung Kiu
Guangzhou R&F Properties continues its withdrawal from the Nine Elms regeneration area in London, announcing thursday that he plans to sell his 50% stake in a joint venture with fellow Chinese developer CC Land to the latter company’s boss for HK$2.66 billion ($340 million).
R&F said it would book a loss of HK$1.84 billion ($230 million) on the disposal, with proceeds from the disposal first applied to repay loans owed by the group, which has 18 billion RMB ($2.7 billion) of capital market debt. maturing or becoming puttable in 2022.
The sale of the stake by R&F, which in January negotiated a deferred payment schedule for $725 million in offshore bonds, came a day before the developer said PricewaterhouseCoopers had resigned as auditor and the company would not release its audited financial results until April 30, putting it at risk of suspension by the Hong Kong stock exchange.
The sale of the project known as Thames City marks the second divestiture of R&F’s Nine Elms announced in as many months, after the cash-strapped developer agreed in March to sell its neighboring mixed-use Vauxhall Square project to the Hong Kong-based Far East Consortium for £95.7 million ($124.8 million).
Formerly known as Nine Elms Square, Thames City is a mixed-use development consisting of 12 residential buildings, a park and other facilities such as a clubhouse, landscaped gardens, restaurants, outlets retail and commercial spaces, R&F said in a filing with the Hong Kong Stock Exchange.
Located south of Nine Elms Lane near London’s disused Battersea Power Station, R&F and CC Land had acquired the 449,000 square foot (41,713 square meter) site from Dalian Wanda Group in 2017, immediately after buying of the project by Wanda for $605 million from St. Modwen Properties.
The buyer of the half stake is an entity wholly owned by CC Land founder and billionaire chairman Cheung Chung Kiu. R&F, controlled by co-chairmen Li Sze Lim and Zhang Li, said it expects to incur a loss on the disposal of HK$1.84 billion ($230 million).
Factoring in Thames City’s salable floor space of 1.7 million square feet, Cheung’s consideration values the project at around $400 per square foot of floor space.
The first phase of the project, comprising three residential towers, launched on presale in 2020 and is under construction, R&F said. The Evening Standard newspaper reported last November that only a third of the 300 apartments in the first phase had been sold, with prices ranging from £997,500 ($1.25million) for a one-bedroom unit to £1.385million for a three-bedroom.
As part of a profit-sharing scheme, R&F is entitled to receive part of Cheung’s share of Thames City profits after cumulative sales of phase one units hit £1.2billion .
Following the sale of Thames City, R&F still has two projects in the UK, including One Nine Elms, a £900million mixed-use project that made unwanted headlines earlier this year when workers reportedly shot down tools and left the site after the Chinese company failed to pay the main contractor.
The company’s Queen’s Square project in the Croydon area of south London has been stalled since 2020, with local reports in February noting no plans to restart the project, which R&F had bought from local developer Minerva in 2017 for £60m (then $74.8m).
On March 25, R&F spooked investors by announcing on the Hong Kong Stock Exchange that it planned to declare a loss in 2021 of no less than 8 billion RMB ($1.21 billion), although it took in more than $1.6 billion from selling a logistics facility in Guangzhou to Blackstone last year.
The developer has also struggled with its Australian operations, with Australian media reporting in April that R&F had abandoned a $4.7 billion residential project in the Brisbane area.
In Hong Kong, R&F has now named BDO Ltd, a local unit of Belgian accountancy firm Binder Dijker Otte, as its new auditors as it asks the HKEX to avoid a mandatory suspension of its shares this month after missing the date. April 30 deadline for submitting its financial statements and annual report.
Feel good at home
Cheung and his CC Land vehicle have been aggressive buyers in the UK capital, notably with the $1.42 billion acquisition of the City of London’s Leadenhall Building (aka the Cheesegrater) in 2017.
Later the same year, CC Land joined a group of investors funding the construction of the 40 Leadenhall (aka Gotham City) office project, Bloomberg reported. In 2019, the Chinese developer committed £182 million ($236 million) to a scheme to turn Whiteleys department store in Queensway into a 1.1 million square foot mixed-use development.
More recently, Cheung raised eyebrows when he won permission to redevelop an aging building in Knightsbridge into an eight-story, 62,000 square foot building. lavish mansion overlooking Hyde Park in central London.