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January 27, 2019 at 02:46 PM
The Chinese company that is trying to acquire Genworth Financial Inc. says it is making major changes in its real estate development operations, in an effort to reduce debt levels and improve cash flow.
(Related: New York Approves China Oceanwide-Genworth Deal)
An affiliate of China Oceanwide Holdings Group Ltd. announced last week that it’s selling its Fanhai Construction unit to a real estate development unit of Sunac China for 12.6 billion renminbi, or the equivalent of about $1.9 billion.
Fanhai has been developing a Beijing residential, office and hotel site, and a residential and commercial development in Shanghai. The two projects could eventually create a total of about 14 million square feet in space, or the equivalent of about five new Empire State Buildings.
In related news, China Oceanwide told the Los Angeles Times that it has temporarily paused work on Oceanwide Plaza — a $1 billion condominium, hotel and shopping complex in downtown Los Angeles — while it recapitalizes the project. The company told the Times it expects to resume work on the project in mid-February.
The board of Oceanwide Holdings Co. Ltd., a publicly traded China Oceanwide affiliate, said in a Sunac-Fanhai deal announcement that they are making that deal partly because of the effects of China’s new real estate financing rules on the company’s capital turnover rate and liquidity.
The Sunac deal should reduce the Oceanwide Holdings unit’s debt, reduce pressure on the company’s cash flow, and improve overall financial stability, the Oceanwide Holdings board said.
China Oceanwide and Genworth
Genworth has been a major player in the U.S. life insurance, annuity and long-term care insurance markets, and is still a major provider of mortgage insurance.
