UPDATE 2: 12:31 a.m. ET 3/1/2024: China Vanke Co. Ltd. has signed an agreement with state-owned Shenzhen Metro Group Co. Ltd., or SZMC, the company’s largest shareholder, to sell a certain stake in its long-term rental apartment arm Zhuhai Port Apartment Management Co. Ltd., according to two sources familiar with the matter.
Sources said SZMC’s investment in the rental apartment arm – despite resulting in relatively small net proceeds for Vanke – underlines support from the shareholder, which could also help pave the way for any potential real estate investment trust, or REITs, issuances via Port Apartment.
Established in 2016, Port Apartment is a wholly owned subsidiary of Vanke and one of the largest centralized apartment providers in China. As of September 2023, the brand operated about 229,000 rental units with an occupancy rate of 94.4%. In the nine months ended Sept. 30, 2023, Port Apartment logged CNY 2.53 billion ($351.6 million) in revenue, up 9.4% year over year, according to Vanke’s Q3’23
report.
Management of Vanke said during a January 2024 investor
call that it is working on issuing indemnificatory housing REITs via its long-term rental apartments this year.
Vanke has been working on having its long-term rental apartments included in the government’s indemnificatory housing program. As of Sept. 30, 2023, among the rental housing under the management of Vanke, 90,500 units were included in the affordable rental housing program, according to the company’s Q3’23 report.
Vanke did not respond to requests for comment as of press time.
UPDATE 1: China Vanke’s Offshore Notes Drop as Much as 5 Pts Today, Feb. 27, Following Report on Non-Standard Debt Extension Negotiations
UPDATE 1: 5:33 a.m. ET 2/27/2024: Chinese developer China Vanke Co. Ltd.’s offshore notes dropped as much as five points today, Feb. 27 following Reorg’s
report on Monday that the company is negotiating with certain lenders to extend its near-term non-standard debt. Its $600 million 4.2% due June 7 notes were indicated around 92/ 93.5 this afternoon, down 2.5 points, and its $1 billion 3.975% due 2027 notes were down about five points to around 55/ 57, according to two buysiders.
Certain non-standard debt, originally due December 2023, was extended for three months until March this year. With the maturities once again approaching, a team of Vanke executives led by Chairman Yu Liang traveled to Beijing to meet with regulators and negotiate with creditors for more breathing room over the non-standard debt maturities, as reported.
Original Story 5:14 a.m. UTC on Feb. 26, 2024
Vanke Negotiates With Creditors to Extend Non-Standard Debt, in Talks to Potentially Sell Stake in Rental Apartment Arm
China Vanke Co. Ltd. is negotiating with certain lenders, mostly insurance companies, in an effort to extend the near maturities of its non-standard debt, and company management visited Beijing recently to seek regulators’ coordination in facilitating the extension talks, according to two sources familiar with the matter.
Certain non-standard debt, originally due December 2023, was extended for three months until March this year. With the maturities once again approaching, a team of Vanke executives led by Chairman Yu Liang traveled to Beijing to meet with regulators and negotiate with creditors for more breathing room over the non-standard debt maturities, sources said.
On potential asset disposal, Vanke is planning to sell certain stake in its rental apartment arm, Port Apartment, and potential buyers involved in the discussions include state-owned enterprises, said a third and a fourth source.
Port Apartment, Vanke’s rental apartment brand, was established in 2016 to offer long-term rental and one-stop shopping rental services. The brand operates over 400 stores in more than 30 cities, according to Port Apartment’s
Wechat account.
As
reported, Vanke is also in talks with Shenzhen state-owned enterprises to potentially sell stakes in its urban renovation project, Shenzhen Sanxing Industrial Zone Project I and Shenzhen Sanxing Industrial Zone Project II.
During a Jan. 9
investor call, management of Vanke said that the company’s largest shareholder, Shenzhen Metro Group Co. Ltd., or SZMC, was still in the process of identifying assets for potentially taking over CNY 10 billion ($1.408 billion) worth of Vanke’s urban renewal projects in Shenzhen.
Regarding the offshore maturities due in 2024, the company also said during the call that the resources to repay its $630 million 5.35% notes due March 11 include internal cash and proceeds from onshore projects, and any new offshore loans would help repay its CNH 1.445 billion ($200.8 million) 3.45% notes due May 25 and its $600 million 4.2% notes due June 7, sources said.
For the year of 2023, the company
reported a 9.8% year-over-over decline in accumulated contracted sales of CNY 376.12 billion with a 6.2% year-over-year decrease in accumulated contract sales area of 24.7 million sq.m.
Vanke declined to comment.