China Vanke to sell shares in Banyan Tree units for $89 million

HONG KONG – Real estate giant China Vanke is selling its stake in luxury hotel chain Banyan Tree Holdings’ China units, a deal that will generate 480 million yuan (S$89 million) for the developer seeking to weather the country’s property downturn.

Vanke will sell its equity in the hotel management joint ventures including Banyan Tree Services (China) and Banyan Tree Hotel Management (China) to the Banyan Tree group. The shares in the units were valued in the range of 440 million yuan to 486 million yuan.

Banyan Tree said the transaction reinforces its dedication to the Chinese market, allowing it to capitalise on the growth opportunities within the region.

“It will enable the company to streamline strategic decision-making in response to market dynamics and enhance operational efficiency in day-to-day operations,” the company said in a bourse filing on Dec 28.

Vanke also agreed to buy Banyan Tree’s shares in a hotel business known as Banyan Tree Assets (China) Holdings for 30 million yuan. The divestment of the hotel ownership component is in line with the company’s asset-light strategy, said Banyan Tree.

The Chinese firm faces mounting pressure due to debt obligations. As the nation’s second-biggest developer by sales, Vanke is burdened with sluggish sales, falling revenue and 1.28 trillion yuan in liabilities.

Vanke’s Hong Kong shares rose 4 per cent as of 1.26pm on Dec 28, paring 2023’s decline to 55 per cent.

The company, one of the few remaining investment-grade Chinese developers, has three notes coming due in 2024 in March, May and June.

Partly state-owned, Vanke has received more support from the government compared with peers. At least two state-backed insurers agreed to give up their right for an early repayment on so-called non-standard debt, people familiar with the matter said last week.

In a November meeting with Vanke creditors, Shenzhen’s State-owned Assets Supervision and Management Commission also expressed confidence in the developer.

Vanke needs to navigate a challenging path ahead. The slump in China’s real estate sector is bound to extend into next year, according to forecasts from investment banks and securities houses including Goldman Sachs and Morgan Stanley. BLOOMBERG

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