Billionaire Li Ka-shing weighs sale of two properties worth $7.31b in Beijing, Shanghai

Li Ka-shing. Photographer: Justin Chin/Bloomberg

Hong Kong tycoon Li Ka-shing plans to dispose of two properties in Beijing and Shanghai worth 50 billion yuan ($7.31 billion), a sign the billionaire is further pulling out of the Chinese mainland.

CK Asset Holdings Ltd., Li’s flagship business, plans to sell a mixed residential and commercial project in northeast Beijing, Caixin learned from multiple sources. Mainland property giant Sunac China Holdings Ltd. is interested in taking over the project, a person close to the deal told Caixin.

CK bought the land nearly 20 years ago. It paid 700 million yuan for the 66 acres, and phase one of Yicui Garden was completed and sold in 2013. As phase two was not started for years, the Ministry of Land and Resources listed it in 2010 as idle land.

Phase two of Yicui Garden is currently under construction, including high-rise condos and townhouses. Some of the buildings are close to completion. The project has applied for pre-sale approval, which is expected by the end of this year, according to a project staffer.

CK bought the Shanghai land in 2006 together with Zhejiang-based developer Herun Group Co. Ltd. The project has a total construction area of 289 acres. CK holds a 60% stake in the project and Herun holds 40%. In January, CK said it was exploring acquiring the 40% stake from Herun.

CK intends to sell the two assets as a package, and a possible deal is under negotiation, Caixin learned.

Chinese regulators are mulling a new round of credit tightening targeting big property developers, which will limit the number of buyers willing to acquire the assets, a person close to the matter said.

Regulators are due to test a new financing directive on 12 top real estate companies that will limit their ability to take on more borrowing, according to sources who took part in a meeting Aug. 20 in Beijing involving the People’s Bank of China, the Ministry of Housing and Urban-Rural Development, property enterprises and other government bodies.

At the meeting, the regulators conveyed a “three red lines” policy that sets limits on bank borrowings by developers: a liability-to-asset ratio (excluding presales) of no more than 70%; a net debt-to-equity ratio of less than 100%; and cash holdings at least equal to short-term debt.

Developers subject to the trial include Sunac China, China Evergrande Group, Country Garden Holding Co. Ltd. and Zhong Liang Holdings Co. Ltd. Data compiled by Caixin show that Evergrande, Sunac, Greenland, and Zhong Liang have already crossed all three red lines and would be subject to the bank borrowing limits.

Sources at Sunac China said they are unware of whether the company is planning a large asset purchase. CK didn’t immediately reply to a Caixin reporter’s inquiry.

Li is known for close relations with Beijing, but his ties to mainland power appear to have weakened since President Xi Jinping took office in 2013.

In October, CK Asset sold a 1.53 million square-foot development in Dalian for 4 billion yuan. After its most recent disposal of a $1.02 billion project in Chengdu in July, CK Asset said it still has more than 50 real estate projects in more than 20 mainland cities.

This story was first published on Caixin Global.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.