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Dalian Wanda Group sells off USD$9.3 billion in Commercial Real Estate

Real estate, culture, internet and finance giant Dalian Wanda Group announced its plan to sell its hotels and tourism projects to Sunac China for USD$9.3 billion. The company is considered to be the world’s largest commercial property investor, owning a total of 32.33 million square meters of property spaces, valued at over USD$117.06 billion. It is also one of the largest oversea Chinese investor, with billions of dollars invested in North America and Europe, primarily in the culture, sports and real estate sectors. Among its many holdings, Wanda owns the largest movie theatre chain in the world, AMC Theatres, with over 661 theatres worldwide, capturing a market share of 24%. The company also holds Carmike Cinemas, the fourth largest movie theatre chain in the United States, and Odean & UCI Cinemas group, the largest cinema chain in Europe.

The deal, which is considered the second-biggest real estate deal in China, will, according to Reuters, strengthen “Wanda’s case for a mainland listing after its property unit delisted from Hong Kong last year.” It also comes at a time when the Chinese government has been pushing major firms (both state and privately-owned) to stick to their core businesses, manage their debt and to be cautious with regard to foreign investments.

Specifically, in the last year officials in Beijing have tightened regulations, restricting foreign direct investments (FDI) in hopes of slowing down the pace of cash flowing out of the country. A 2017 report by Bloomberg estimated that such regulations have resulted in a 55% decline in outward investment so far in 2017. Consistent with this, according to the data collected by CIUA, Chinese investment in the Canadian real estate sector declined by 33.5% in 2017, as compared to the previous year. The average monthly Chinese FDI in commercial real estate shrank from CAD$281.4 in 2016 to CAD$187.4 in 2017.

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