Future Land Unit to Sell Projects After Billionaire’s Arrest 

By Bloomberg News
(Bloomberg) -- A unit of Wang Zhenhua’s real-estate empire is in talks to sell stakes in about 40 projects, stoking concern the arrest of the billionaire property tycoon is squeezing financing at the developer, and sending stocks in his companies plunging afresh.

The projects up for sale account for about 12% of Seazen Holdings Co.’s developments at the end of 2018. Seazen has already sold stakes in five projects for 2.4 billion yuan ($349 million), the firm’s Hong Kong-listed parent Future Land Development Holdings Ltd. said in statement Tuesday.

The sale talks show the increasing pressure that firms linked to Wang are under since he was arrested on July 10. Shanghai authorities said that day they formally arrested two individuals for suspected molestation of a minor. More than $5 billion has been wiped off the market value of Wang’s companies, while S&P Global Ratings, Fitch and Moody’s Investors Services are reviewing Future Land’s credit ratings for a possible cut.

Detained Billionaire Developer Highlights Key Man Risk in China:

“It is a rather negative sign for the company’s operations,” Lucror Analytics Pte credit analyst Chuanyi Zhou wrote in a note.

“It possibly means that support by banks is not yet back in place to fund development.” Future Land shares slumped as much as 11% in early Hong Kong trading. Seazen plunged almost 9.5%, near the daily trading limit.

The share-price decline could further damp the firm’s financing ability, because Future Land has pledged about half its stake in Seazen for loans, according to Moody’s. While Future Land has enough cash to cover short-term debts, it’s now harder for it to sell bonds at usual costs, Bloomberg Intelligence anaylsts wrote last week.

Seazen said the sale of projects shouldn’t materially impact its 2019 operating results, and that the company’s annual contracted sales target remains on track for 270 billion yuan this year.​

Lucror’s Zhou said because the disposal of projects will reduce saleable resources, contracted sales could in turn be negatively affected if the company doesn’t acquire any new land for development.