Two sources said Yuexiu Property, a Chinese state-owned company, has withdrawn out of a proposed $1.7 billion deal to buy China Evergrande Group’s Hong Kong headquarters building due to concerns about the developer’s precarious financial status.
The failure of negotiations for the sale of the famous skyscraper is yet another setback for Evergrande, which has been scrambling to sell assets to satisfy creditors banging on its door. It has already missed three rounds of interest payments on its international obligations, owing to its more than $300 billion in liabilities.
According to the sources, Yuexiu, which is based in Guangzhou, came close to finalizing a deal in August to buy the 26-story China Evergrande Centre in Hong Kong’s Wan Chai neighborhood, which serves as Evergrande’s local headquarters.
The proposal, however, fell through after Yuexiu’s board objected to the plan, citing Evergrande’s unresolved indebtedness as a potential stumbling block to the transaction’s smooth completion, they claimed.
Evergrande, formerly China’s top-selling developer, has sought to generate capital in recent months by dumping assets in mainland China and Hong Kong, ranging from buildings to holdings in subsidiaries.
Evergrande did not react to a request for comment after its 8.75 percent June 2025 bond fell more than 6% to 18.625 cents on Friday. Yuexiu didn’t react either.
Due to privacy concerns, the individuals declined to be identified.
In 2015, Evergrande paid HK$12.5 billion ($1.61 billion) to Chinese Estates Holdings for the harbourside building, which is located in Hong Kong’s commercial, and nightlife zone and spans 345,000 square feet.
That sale set a record for the highest price per square foot for a single transaction of a commercial building in the Asian financial hub at the time. It also made Evergrande’s property the city’s single largest asset.
According to one of the sources, Evergrande has financed the majority of the acquisition using securitized goods worth more than HK$10 billion, which implies it will only recuperate a little amount of money from the sale of the building.
PROSPECTS FOR EVERGRANDE
According to one of the individuals, Yuexiu’s board of directors, which concentrates on property developments in China’s Greater Bay Area and has a foothold in Hong Kong, became concerned about the deal’s certainty at a time when Evergrande’s future is uncertain.
Yuexiu also received advice from the local government of Guangzhou, in the southern Chinese metropolis, to put the purchase on hold at the end of August.
However, the acquisition was put on hold in late August because the Guangzhou government wanted to examine Evergrande’s entire financial status first to better understand how profits from asset sales were used.
A request for a response from the Guangzhou government was not returned.
Separately, two sources said Evergrande is in final talks to sell a 51 percent stake in its property management business, Evergrande Property Services, to domestic rival Hopson Development, in a deal for up to HK$20 billion.
One of them stated that both sides are finalizing details, including the buyer’s finance.
When asked about the deal, Hopson indicated that any comments would have to wait until it was made public.
If the Hopson purchase goes through, it will be Evergrande’s largest asset sale to date. A bottling water company and an electric vehicle manufacturer are among the developer’s other ventures.
According to reporters, the company is also close to selling its Guangzhou FC soccer stadium and accompanying residential projects to Guangzhou City Construction Investment Group.
