R&F Steps Into Wanda Asset Sale With Hotel Purchase

Developer R&F Properties will buy a portfolio of hotels being sold by real estate giant Wanda Group, replacing rival Sunac, which had been criticized for assuming too much debt under a previously announced deal.

The restructured deal will see R&F purchase 77 hotels being sold by Wanda, which announced its original plan to sell 76 hotels two weeks ago, the companies said at a joint media briefing on Wednesday. They did not give a reason for the slight discrepancy in the number of hotels being sold.

Under the original plan, Wanda had said it would sell 13 theme parks and the 76 hotels to Sunac China Holdings Ltd. for 63.17 billion yuan ($9.4 billion). The hotel part of that original package carried a price tag of 33.6 billion yuan.

The new plan will see R&F buy the hotel portfolio for a significantly lower 19.91 billion yuan, while Sunac will buy the theme parks for 43.84 billion yuan, raising the total price slightly to 63.75 billion yuan, according to information announced by the companies under the restructured deal.

The original plan came as Wanda was looking to lower its debt, following a multibillion-dollar spending spree over the last five years as part of its plans to transform from a real estate company to an entertainment firm. But investors expressed concerns about Sunac’s plan for such a big purchase, which would have been one of the biggest ever in Chinese corporate history.

The world’s three major credit ratings agencies all took negative action against Sunac after announcement of the original deal, warning about its “aggressive expansion.” Sunac’s stock also traded down sharply.

Sunac Chairman Sun Hongbin said the structure of the new deal will lower the debt burden for his company. When the original deal was announced, Sun told Caixin his company would finance the purchase with its own resources, and added that Sunac had more than 90 billion yuan in its accounts at the end of June.

Contact reporter Yang Ge (geyang@caixin.com)