By P.R. Venkat


China Vanke's majority shareholder has expressed its support of the property developer, including making a commitment to spend more than $1.0 billion on its projects.

State-owned Shenzhen Metro Group said at a recent meeting with financial institutions that it is optimistic about Vanke's prospects and has never planned or expressed intentions to reduce its stake, Vanke said late Monday.

Shenzhen Metro owns over 30% of Vanke, according to FactSet.

As part of demonstrating confidence in Vanke, Shenzhen Metro will buy some of the developer's urban renewal projects in Shenzhen, China, for more than 10 billion yuan ($1.38 billion), which will help boost liquidity, the developer said.

Vanke, like may of its peers, has been hit by declining property sales and weak consumer confidence. Some of China's property companies face a severe liquidity crisis, leading to defaults by developers including debt-laden China Evergrande Group and Sunac China.

The slumping property market has also become a significant drag on China's economic recovery, with authorities and policymakers introducing a number of stimulus measures to prop up buyer demand.

Vanke also said Shenzhen Metro is actively preparing to purchase the company's bonds in the open market.

"In our view, Vanke has enough liquidity to meet its debt maturities, both onshore and offshore, for the rest of 2023 and 2024," S&P Global Ratings said in a note last week, citing the company's improving property sales.

The ratings agency expects Vanke to see positive operating cash flows in the next 12-18 months if it maintains monthly sales at current levels.


Write to P.R. Venkat at venkat.pr@wsj.com


(END) Dow Jones Newswires

11-06-23 2056ET