Evergrande Be Damned: Chinese And Hong Kong Developers Pump £430M Into Giant London Scheme
If there is one big question on the minds of investors in every asset class across the world right now, it's what impact will the potential collapse of Chinese developer Evergrande have on global markets?
In spite of these fears, a £3B London project backed by two giant Chinese and Hong Kong developers received a major capital infusion in the past week, Bisnow can reveal.
The new capital highlights a commitment to London, one of the developers said, and suggests that any potential Chinese liquidity crunch from Evergrande’s woes, a major worry for economists, is not manifesting itself just yet.
CC Land said it had committed to providing £430M of new capital to a joint venture that is building One Thames City, a huge, primarily residential development previously called Nine Elms Square in the Nine Elms area on the southern bank of the Thames, according to an announcement to the Hong Kong Stock Exchange on 16 September.
CC Land is developing One Thames City in a 50:50 joint venture with R&F, a mainland Chinese developer that has come into focus following Evergrande’s liquidity issues.
One Thames City is a 12-building development comprising 1,400 homes, shops, restaurants and 120K SF of offices. The first phases commenced in 2019, and it included three residential towers, one of which, at 53 storeys, will be the tallest residential building in zone one of London. JLL is currently marketing for sale the apartments in the tower.
The first phase is scheduled for completion in 2022 or early 2023, with the whole scheme to be completed by 2025. The cost to build the whole project has been cited at as much as £3B. Mace won a £480M construction contract for the first phase.
CC Land’s announcement said that the new capital was being provided in the form of unsecured, interest-free shareholder loans with no fixed repayment date.
It said some of the capital would be used to make deferred acquisition payments, some to repay bank debt and some to fund further construction.
R&F did not make an announcement on the new capital, but a spokesperson did provide an emailed statement to Bisnow.
“R&F Properties is fully committed to London and has a major programme of developments progressing at pace at Nine Elms," it stated. "We are more excited than ever about the future for London with the Northern Line Extension station at Nine Elms opening adjacent to our developments on Monday, and all these projects are well-financed.”
On Monday R&F said that two of its major shareholders had agreed to provide the company with £750M of interest-free loans and that it had enough liquidity to meet its obligations in the near future. It is a major Chinese residential developer with several major schemes underway in London.
CC Land and R&F’s involvement in the One Thames City development has something of an interesting backstory. Chinese conglomerate Dalian Wanda agreed to buy the site of the scheme, the former New Covent Garden fruit and flower market, for £470M in 2017. But in between agreeing the deal and completing it, Wanda faced its own debt problems, which forced it to sell assets.
Rather than drop the purchase, it completed the deal and then immediately sold the site to CC Land and R&F.