Chongqing "Banyan Tree" was auctioned off: 700 million yuan including hundreds of unfinished villas, the developer behind it is not small
2024-08-14
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Image source: Alibaba Asset Auction Network
The failure of Shenji Industrial Group reflects the common difficulties currently faced by high-star hotels in the real estate sector.
Yu Shuaiqing/From BeijingBanyan Tree has also reached the point of being auctioned off.On August 9, according to the Alibaba Asset Auction website, Banyan Tree, one of the top luxury hotels in China, and hundreds of unfinished villas located in Beibei, Chongqing, will be auctioned on September 2, with a starting price of 700 million yuan. As of the morning of August 14, the assets have been viewed by 6,144 people, and 158 people have set reminders. But no one has signed up yet.It is worth noting that the above-mentioned assets all come from Chongqing Shenji Industrial (Group) Co., Ltd. (hereinafter referred to as "Shenji Industrial Group"), which is known as the "hotel king". Due to the excessive expansion and poor management of Shenji Industrial Group, the capital chain was broken and the project was suspended, and it eventually went bankrupt and liquidated.━━━━
Unfinished villa complex auctionedThe auction of Banyan Tree assets in Beibei, Chongqing has attracted widespread attention in the industry.Public information shows that the Banyan Tree project is large in scale, covering an area of about 616 acres, and was a key project of the Shili Hot Spring City in Beibei, Chongqing. At the same time, Banyan Tree is the first luxury hot spring resort under the Banyan Tree Group and is also one of the top luxury hotels in China.The Banyan Tree project is divided into three phases of development, consisting of two hotels, Banyan Tree and Angsana, as well as single-family and semi-detached villas and some apartments. In addition, it also launched exclusive business vacation villas for self-residence - Banyan Tree Private Residences.According to the bidding announcement, the assets involved in this auction include Banyan Tree Hotel and its Phase II, employee dormitories, helipads and office buildings.Specifically, the first part of the assets is the real estate, machinery and equipment, electronic equipment, furniture and home appliances in the first phase of Banyan Tree Hotel. Among them, the Banyan Tree Hotel covers an area of 20,000 square meters, was built in May 2013, and is currently in operation. It is reported that although the judicial auction may lead to a change in the owner, it will not affect the daily operation of the hotel.Banyan Tree Phase II includes 9 plots of land use rights and 2 above-ground buildings and vehicles. It is planned to build 170 buildings including resort hotels, forest houses, and health care apartments. So far, except for one idle plot, 119 buildings have been built on the other 8 plots. Although they have been developed, construction has been suspended for many years. Some buildings have only completed the main structure, and some have only one or two floors built, and the maintenance status is poor.The third part of assets is the staff dormitory (apron), the office building next to the apron, and the ground buildings (Angsana Resort Hotel). It is worth noting that the actual area of the ground project under construction (Angsana Resort Hotel) does not match the planning data and there is an over-planned part.━━━━
The dilemma of developersImage source: Alibaba Asset Auction NetworkWhy did the Chongqing Beibei Banyan Tree Hotel end up being auctioned off? This is closely related to the difficulties faced by the developer behind it.It is reported that the above assets belong to Chongqing Baichun Industrial Co., Ltd. (hereinafter referred to as "Chongqing Baichun Industrial"). In 2023, Chongqing Yuzhou Garden Engineering Company filed for bankruptcy liquidation with the court because it owed tens of millions of yuan in projects. In September of the same year, the Fifth Intermediate People's Court of Chongqing accepted the case and appointed Dacheng Law Firm as the bankruptcy administrator. This asset auction was also initiated by the administrator.Tianyancha shows that Chongqing Baichun Industry was established in 2011. Its business scope includes investment business (not allowed to engage in financial and fiscal credit business), hotel management and related business consulting, exhibition services, planning (excluding economic and technological exhibitions outside the team), etc. As of the end of 2022, Chongqing Baichun Industry had total assets of 1.743 billion yuan, total liabilities of 1.972 billion yuan, and net assets of -229 million yuan, which was in a state of insolvency.It is worth noting that Chongqing Baichun Industry is 100% owned by Shenji Industrial Group, which in turn is owned by Chongqing Qizhao Investment Management Co., Ltd. and Shen Yong, who hold 87.25% and 12.75% of the shares respectively.According to information, Shenji Industrial Group was established in 1996. Its beneficial owner is Shen Yong. It is a diversified group company with businesses including real estate development, hotel management, automobile sales and import and export trade. At the beginning of its establishment, it was mainly engaged in automobile sales. In 2000, it became the first FAW Audi dealer in Chongqing, and occupies an important position in the Chongqing luxury car market.After making its first fortune, Sunkey Industrial Group started the "international hotel + special real estate" model. This model takes high-profile star-rated hotels as the theme and drives the development and operation of top-level commercial office buildings, luxury brand commercial buildings, high-end residential properties, etc.During its heyday, Shenji Industrial Group included Chongqing Akas Hotel Investment Management Co., Ltd., Chongqing Zhengdian Automobile Sales Co., Ltd., Chongqing Square Centimeter Real Estate Brokerage Co., Ltd., Chongqing Juechi Yacht Club Co., Ltd., Chongqing Shenji General Aviation Co., Ltd., and Shenji International Holdings Co., Ltd. (Shenji International 02310.HK), and was involved in many fields such as automobiles, real estate, hotels, yachts and helicopters.In addition, Shenji Industrial Group also owns many large hotel projects, including Banyan Tree Resort Hotel Beibei, Chongqing, Banyan Tree Private Residences Beibei, Chongqing Westin Jiefangbei, Shenji Financial Plaza, Chongqing Shenji Sofitel Hotel, Sofitel Business Building, Liangping Days Inn International Community, Xiushan Howard Johnson International Community, Xining Central Business City, Hainan Wuzhishan Banyan Tree Resort and many other large hotel projects.Shenji Industrial Group has built a "hotel kingdom" in Chongqing, and its founder Shen Yong is also known as the "Chongqing Hotel King".However, the good times did not last long. Behind the glory of Sunbase Industrial Group, there was a huge crisis. The high cost and high-end positioning made it difficult for the project to gain wide market recognition. In addition, due to the tight capital chain caused by over-expansion, Sunbase Industrial Group began to show signs of fatigue. In 2015, the second phase of the Banyan Tree project was forced to stop due to funding problems, which became the first sign of the group's difficulties.In the following years, Shenji Industrial Group was constantly involved in various debt lawsuits, and its core assets such as the Westin Hotel and Zhengdian Car Dealership were auctioned off one after another.In 2016, the Westin Chongqing Jiefangbei, which had only been open for two years, was put up for sale by Shenji along with the land where it was located, Shenji Financial Plaza; in 2017, Accor Group announced the termination of its cooperative management relationship with Shenji. The reason behind the end of the cooperation was related to the operating debt of about 12 million yuan incurred by the hotel during the management period. Subsequently, Shenji Sofitel Hotel was renamed Athestel Hotel, and the hotel was eventually put on the judicial auction shelf in 2022. Shenji Industrial Group's state-owned construction land use rights in Wuzhishan, Hainan were also publicly auctioned due to compulsory execution, with an area of about 200 acres and a starting price of 66.28 million yuan. In 2022, its subsidiary Chongqing Zhengdian Automobile was unable to repay its debts and was auctioned off for bankruptcy liquidation. After 66 delays, it was finally auctioned for about 98 million yuan.The financial problems caused by Shenji Industrial Group's blind layout and poor management eventually led the company to bankruptcy and liquidation. In January 2022, the Fifth Intermediate People's Court of Chongqing ruled to accept the bankruptcy liquidation application of Chongqing Jiangbei District Guozi Microfinance Co., Ltd. against Shenji Industrial Group.According to the balance sheet provided by Shenji Industrial Group, as of September 30, 2020, its assets were 401,492.51 million yuan, liabilities were 394,453.66 million yuan, and owners' equity was 70,388,500 yuan.In addition, most of the "Shenji Group" companies and their leaders have also been labeled as "dishonest debtors", "debtors", "restricted from high consumption", and "equity frozen".Some industry insiders believe that the failure of Sunbase Industrial Group reflects the general dilemma faced by high-star hotels in the real estate sector. As developers face increasing debt repayment pressure, star-rated hotel projects tied to developers often become the first assets to be adjusted or sold. For example, in 2023, Vanke adjusted its hotel business and sold the management rights of several Banyan Tree hotels for 480 million yuan.As a high-end international hotel brand, Banyan Tree's presence and brand influence in the Chinese market have undoubtedly brought many advantages to its partners. However, this cannot completely avoid the chain reaction caused by the real estate developer's own problems. The auction of the Banyan Tree Hotel in Beibei, Chongqing is a direct reflection of this dilemma.Editorial Board Member on Duty: Li Hongmei
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