Evergrande Property liquidator restarts sale with zero binding offers

Evergrande Property's liquidator has reopened asset sale talks with multiple buyers after an earlier deal collapsed, yet no binding offers have emerged.

Evergrande Property's liquidator reopened sale discussions with multiple potential buyers yet received zero binding offers, reflecting persistent buyer reluctance in China's distressed property sector.

"The liquidator plans to invite potential buyers to conduct due diligence on the group," according to a Hong Kong stock exchange filing. The statement added that discussions remain in preliminary stages and no legally binding agreement has been reached.

The sale process includes both new parties that recently joined and previous participants who had engaged in earlier rounds. A prior potential buyer decided not to proceed, forcing the liquidator to restart the process. The timeline for the sale has not been finalized, and the liquidator has not received any offers in the restarted process.

Evergrande Property represents one of the few remaining valuable assets within the Evergrande Group, which entered court-ordered liquidation in January 2024 with more than $300 billion in total liabilities. The prolonged sale process extends creditor uncertainty — recovery rates in Chinese developer liquidations have averaged less than 10 cents on the dollar — and adds to the broader overhang on China's property sector.

The liquidator's latest update comes more than six months after the initial sale process was launched. The identity of the previous potential buyer that walked away was not disclosed in the filing. Evergrande Property, the property management arm of China Evergrande Group, was listed on the Hong Kong Stock Exchange before trading was suspended in March 2022 alongside its parent company.

China's property crisis, which began with Evergrande's debt default in late 2021, has since spread to dozens of developers including Country Garden Holdings Co. and Shimao Group Holdings Ltd. The sector's distress has weighed on economic growth, local government finances, and consumer confidence across the country's $18 trillion economy. Home prices in China's 70 major cities have fallen for 14 consecutive months through August, according to National Bureau of Statistics data, eroding household wealth and reducing demand for new property services.

For creditors, the Evergrande Property sale is a test case for recovery rates in Chinese distressed asset sales. If the liquidator can secure a deal, it would mark one of the largest successful asset disposals from a Chinese developer liquidation. If talks collapse again, it would suggest that even prime assets are finding few takers in the current environment, potentially depressing recovery expectations for other distressed developer assets.

The liquidator's decision to invite due diligence from multiple parties — rather than negotiating exclusively with one buyer — suggests an attempt to create competitive tension in a market where buyer appetite remains weak. Chinese property sector M&A activity totaled $12 billion in the first half of 2024, down 35% from the same period a year earlier, according to data from Dealogic.

The Evergrande liquidation is being closely watched by international creditors and Chinese regulators alike. The group's offshore creditors, holding roughly $20 billion in bonds, have been locked in restructuring negotiations since 2022 with limited progress. A successful sale of Evergrande Property could provide a template for monetizing other developer assets trapped in China's prolonged property downturn.

The last time a major Chinese developer successfully sold a core subsidiary was in 2022, when Country Garden sold a $500 million property management stake to a state-backed consortium. That deal took eight months to close and required government facilitation. Evergrande Property's sale process has already exceeded that timeline without reaching a binding agreement, showing how much buyer appetite has deteriorated since then.

This article is for informational purposes only and does not constitute investment advice.