(Bloomberg) -- A landmark commercial complex in Beijing is being put up for sale by Hong Kong-headquartered property company Parkview Group, as China’s prolonged property slump weighs on its cash flow.
Parkview Green, locally known as Fang Cao Di, located in Beijing’s central business district, is up for sale as the company grapples with high mortgage payments and low occupancy rates in the capital city, according to people familiar with the matter, asking not to be named discussing private matters.
A Chinese state-owned firm is interested in purchasing the asset, which is known for its unique pyramid-shaped structure, the people said. Considerations are ongoing and no final decisions have been made, the people added.
Completed in 2012, the 200,000 square meter mixed-use development located in Beijing’s Chaoyang district includes a shopping mall, hotel, office towers and an arts hub, according to its website.
The potential sale of Parkview Green comes amid China’s prolonged real estate slump and sluggish consumer spending. Retail sales rose 3% in November from a year ago, the slowest pace in three months and undershooting even the most bearish of forecasts.
Meanwhile, China’s commercial real estate is suffering a downturn, with Beijing’s city-wide vacancies jumping to 20.6% in the second quarter, the highest in at least 15 years, Bloomberg News reported earlier citing Colliers data.
Parkview is involved in real estate developments across Asia and Europe, with a focus on innovative and green designs to create iconic landmarks. The group’s other projects include the Hotel Eclat boutique hotel in Taipei, Parkview Square and the Parkview Eclat in Singapore, and the Beauvallon Hotel in St. Tropez, France.
Rental income generated from Parkview Green isn’t enough to cover the interest payments on a loan, the people said, adding that the current occupancy rate is below 70%.
A spokesperson for Parkview said that the interest on the facility has at all times been kept current, without elaborating further.
In August, a syndicate of lenders agreed to extend the maturity of the loan secured over Parkview Green by a year to August 2025, the people familiar said. Initially signed in 2019, the borrowing then comprised an offshore $774 million piece and an onshore 1.2 billion yuan ($165 million) tranche, the people added.
Existing lenders also agreed to lower the loan’s interest rate and convert part of the facility into renminbi from US dollars to help cut borrowing costs, the people said.
Meanwhile, Parkview is facing mounting pressure in Hong Kong as the group looks to refinance its Hong Kong Parkview project, an apartment complex located in the city’s southern district, through a private credit loan.
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