Dalian Wanda Group requests its second share trading suspension

Wanda Vista Hotel and Jewel Residences, Gold Coast, Australia

In order to prepare for a pending launch of possible asset restructuring, Wanda Hotel Development has requested the Hong Kong stock exchange suspend trading of its shares. 

The request follows reports that Dalian Wanda Group has denied allegations that it is selling its Australian projects worth approximately $1.5 billion in a statement to the Hong Kong stock exchange as a regulatory crackdown on overseas investment goes underway, Mingtiandi reported. According to a statement from Wanda Hotel Development, “Both projects are progressing as planned.”

Kingston Lin King-ham, director at AMTD securities brokerage, told the South China Morning Post that Wanda's gearing ratio is quite high. Therefore, the company may have requested the trading halt in order to sell some of its overseas assets to pay off debt. “The group is already selling some of its properties to repay the debt, so the move is not that surprising,” he said. Just last month, the group sold a majority of its domestic hotels and theme parks for $9.4 billion to repay its loans. The group's Wanda Film Holding subsidiary suspended trading in early July in order for a pending restructuring of the company as well.

Wanda is reportedly currently in talks to sell the $791-million One Circular Quay hotel and residence tower on Sydney Harbor and the $712 million Jewel resort on the Gold Coast. The alleged asset sale follows a few weeks after Chinese authorities targeted the group to stem a rapid outflow of capital from the country's dropping foreign exchange reserves.

The One Circular Quay is about to launch sales of its 190 apartments while development of the 181-guestroom hotel is underway. The Australian Business Review reported that many local and international firms are preparing their formal offers for the project.

Meanwhile, Wanda's Jewel resort at Surfers Paradise is set for completion by 2019. However, reports from last year stated that the integrated resort was making few sales. Only 25 percent of condo units were sold in the first year they were available. This year, Wanda reported that it has already sold one-third of the 512 units. 

Construction of the Wanda Vista in One Circular Quay at Sydney Harbor will begin in 2018.

The hotel development company debuted in Australia in August 2014 and established a Wanda Australia affiliate with funding up to $1.57 billion for investment in the country. The developer's first investment was the acquisition of a 55-percent stake in the Surfer's Paradise resort project from China's Ridong Group for $278 million.

In January 2015, the developer completed its second major Australian deal—the acquisition of the Sydney harbor-front site with the Gold Fields House office tower—from Blackstone for $329 million. Wanda also acquired the Fairfax House next to the Gold Fields tower site from two Chinese-owned firms for $57.8 million. Next year, construction of the One Circular Quay mixed-use development with a Wanda Vista hotel, apartments and retail space will be underway.

Wanda­—along with other mainland firms—has come under fire for their overseas acquisitions, which are supported by debt. After a five-year global buying spree, which included Wanda's purchases of real estate, film studios and sports firms, Chinese regulators quickly cracked down on major investment firms Anbang Insurance Group, Fosun International and HNA Group. Chinese investor Anbang Insurance Group also denied reports last week that it was being pressured by regulators to sell its overseas assets as Anbang's chairman Wu Xiaohui has been detained by Chinese authorities since June, The New York Times reported. 

In June, President Xi Jinping passed a disciplinary measure that banned Wanda from taking on more loans for six overseas entertainment projects. Wang Jianlin, the head of Wanda Group, announced that the company's major acquisitions will be confined to China in the future. In July, Wanda sold a 77-hotel portfolio to Guangzhou's R&F Properties and 13 tourism projects to Sunac China for $9.4 billion—China's biggest real estate deal ever recorded.