Chinese developer R&F has agreed to sell a huge London apartment and hotel development at a significant discount to its book value as it seeks to reduce its debt load.

In a stock exchange announcement, R&F said it had agreed to sell its One Nine Elms scheme to a company controlled by Cheung Chung Kiu, the chairman of Hong Kong investor CC Land.

One Nine Elms is a 1.1M SF scheme across two towers in the Nine Elms district of south-west London, near Vauxhall. It comprises a 57-storey tower and a 42-storey tower and will include a five-star hotel under the Park Hyatt brand, 103 Park Hyatt-branded apartments and 334 additional apartments. A total of 57 affordable homes will also be built and managed by Thames Valley Housing.

The scheme has a theoretical gross development value of £1.3B but was valued at £1B in December 2023, the stock exchange announcement says.

Construction of the scheme stalled in the spring of 2022 after contractor Multiplex halted work on the site due to unpaid bills. In June that year, R&F secured a £772M debt facility from a consortium that included Apollo Global Management, Carlyle Group, Crosstree Real Estate Partners and Précis Capital, allowing work to restart. Completion is now scheduled for April.

The special-purpose vehicle that owns the property has a total of £897M of debt, the announcement says, a figure that is expected to rise to £965M when interest is taken into account at the date of completion.

That means the debt is almost the same as the value of the property, and the level of sales at the scheme could allow the loans to fall into default.

“Certain sales milestones prescribed in the agreements in relation to the target group loans have become increasingly difficult to meet which, if not met, may result in a default of the target group loans,” the announcement says.

The SPV that owns the scheme has a net liability of £628M, and as such, CC Land will pay only a nominal amount for the development, the announcement says. The main reason is to get the debt off its books, R&F said.

CC Land announced itself in the UK real estate world in 2017 when it bought the Cheesegrater office scheme in the City from British Land and Oxford Properties for £1.2B. It also bought a 50% stake in another of R&F's Nine Elms developments at a discount as R&F seeks to pay down debt.