China's Wanda Puts $1.2B Beverly Hills Development Project Up for Sale

Wanda Rendering - H - 2016

As Chinese tycoon Wang Jianlin's firesale of overseas assets continues, the conglomerate is also looking to sell a $900 million skyscraper in Chicago.

Chinese billionaire Wang Jianlin’s Dalian Wanda Group is ready to sell its remaining two overseas real estate projects, including a much-hyped $1.2 billion luxury condo and hotel complex in Beverly Hills.

A little over a year ago, when Wang was boasting of plans to pour billions more into the U.S. entertainment industry, the One Beverly Hills development, as it is called, was being touted as the Chinese conglomerate's future Hollywood headquarters. Those plans were soon dashed, however, as Chinese regulators upped their scrutiny of Wanda's heavy debt load and potentially risky bets overseas, transforming the company from aggressive acquirer into desperate seller seemingly overnight.

Wanda bought the Los Angeles project, which sits along Santa Monica Boulevard on the lot adjacent to the Beverly Hilton Hotel, in 2014. It was to comprise 193 condos, a 134-room luxury hotel and commercial offices for Wanda. The development overcame bitter objections and lawsuits filed by Beny Alagem, the owner of the Beverly Hilton, and suffered a further setback when its local development partner exited. Soon Wanda had far bigger worries back in Beijing, though.

The other Wanda asset on the auction block is a $900 million Chicago skyscraper project, of which the company owns 60 percent. Wanda is now actively seeking buyers for both developments, according to a report published Tuesday by Bloomberg, which cited unnamed sources said to be familiar with the plans.

If the deals come together, they will mark the conclusion of a series of asset disposals as frenetic as the acquisition streak that made the Chinese firm a name to know a few years ago. Earlier this month Wanda announced a deal to sell two Australian real estate projects for $913 million. That agreement came just days after the sale of a high-profile London development for around $81 million.

The sales are expected to lessen Wanda's financial strain and help it address upcoming loan repayment deadlines. When Beijing regulators began blocking private Chinese companies from moving money offshore last year, international credit-rating firms downgraded Wanda's flagship commercial-property subsidiary to junk status, triggering higher interest payments on its offshore debt.

In a company address earlier this month, Wang pledged that Wanda wouldn't experience any defaults and promised to reduce the company's debt burden "through all available means," including the sale of more non-core assets. Wanda Commercial Properties owed more than $2 billion in offshore debt in 2016, according to its most recent regulatory filing.

There have also been industry murmurs that Wanda is open to offloading its majority stake in AMC Entertainment, North America's largest movie theater chain. Some reports, unconfirmed by Wanda, have said that the company is simultaneously exploring listing some of AMC's international assets, such as its European movie theater circuits Odeon & UCI and Nordic Cinema Group. Legendary Entertainment, meanwhile — Wanda's largest overseas acquisition to date, picked up for $3.5 billion in 2016 — has been hiring new senior leadership and is not thought to be for sale. 

Wang's hurried selling in the international sphere has been matched by huge-ticket transactions and fast-paced unwinding in mainland China. Wanda sold the bulk of its Chinese hotels and theme parks for a combined $9.5 billion last July. Just yesterday, the company announced a $5.4 billion sale of 14 percent of Wanda Commercial Properties Co. to an investment consortium led by Chinese internet giant Tencent. The investors, which also included Suning Holdings, and Sunac China, purchased the stake from shareholders who helped finance Wanda's de-listing from the Hong Kong Stock Exchange in 2016. Wanda and its new partners said Monday that they will strive to take the unit public in mainland China as quickly as possible.