China Evergrande Group, the nation’s No.2 property developer by sales, will sell a bulk of its commercial properties in an effort to lower its debt ratio, a person with knowledge of the matter said on condition of anonymity.
Local media first reported Evergrande was selling around 200 properties including office towers, shops, hotels, shopping malls, hospitals and convention centres across China.
Over recent years, China has been ramping up efforts to reduce the high debt across the economy, and some fear the fallout from the coronavirus pandemic could worsen the debt woes for key sectors.
The sale comes as Evergrande, which has one of the biggest debt piles among developers in China, has vowed to reduce its debt ratio to ease investor concerns about how leveraged it is. Evergrande’s total borrowings stood at 800 billion yuan (£90.76 billion) at the end of 2019.
Evergrande declined to confirm details of the sales, but said “the sales this time is a normal sales behaviour”.
The properties will be sold individually by company staff, the person with knowledge of the matter said, instead of being offloaded in a bundle.
It remained unclear how much of Evergrande’s commercial portfolio would be sold and how much the firm aimed to raise.
Evergrande’s total completed commercial properties were valued at 92.6 billion yuan as of the end of 2019, according to its annual report. That figure excludes the 47.5 billion yuan worth of car parks that were also categorised as investment properties by the developer.
The firm said last week that its contracted sales of residential development jumped 23.8% in the first six months of 2020 compared to a year ago to 348.8 billion yuan.