What’s new: Chinese real estate developer Sunac China Holdings Ltd. sold $530 million of shares in New York-traded Ke Holdings since Oct. 29, slashing its holding in the operator of real estate agency Lianjia to less than 1%.
The sales brought Sunac’s total disposals of Ke stock to $1.08 billion since June 1, the company said. The property company has been raising large amounts of cash in the face of tightening credit under the weight of Chinese government pressure.
Sunac said proceeds from the stock sales will be used as general working capital. In January 2017, Sunac acquired 6.25% of Ke Holdings for a 2.6 billion yuan strategic investment. Shares of Ke lost 74% of their value since peaking in February.
The background: The central government has dramatically tightened credit for developers, putting the industry under pressure and contributing to the liquidity crisis at rival property giant China Evergrande Group, which continues to spook investors.
The government’s “three red lines” policy imposed on developers last September set limits on financial institutions’ liabilities-to-assets ratio, net gearing ratio and cash-to-short-term debt ratio.
Meanwhile, home sales continued to flounder in November. Sales of the top 100 property developers plunged 37.6% year-on-year by value, marking the fifth successive month of decline.
Last month, Sunac entered a private placement agreement to raise nearly HK$5.1 billion ($654 million) by selling 335 million new shares. In addition, Sun Hongbin, the controlling shareholder and chairman of Sunac, is lending $450 million from his own pocket to the developer in the form of an interest-free loan.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (hello@caixin.com)
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