Vanke will divest its stakes in the hotel management joint ventures. Credit: Kanyapak Lim/ Shutterstock.com.

Real estate firm China Vanke (Vanke) is divesting its interest in the China units of luxury hotel chain Banyan Tree Holdings for a consideration of 480m yuan ($67m), reported Bloomberg.

This move by Vanke to divest its stakes to Singaporean company Banyan Tree is said to be part of its strategy to navigate through the challenges posed by downturn in China’s property market.

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According to a filing by the Singaporean company, Vanke will divest its stakes in hotel management joint ventures, namely Banyan Tree Services (China) and Banyan Tree Hotel Management (China).

The valuation of these interests in the units were estimated to be in the range of 440m yuan to 486m yuan as at 30 September 2023.

Facing increasing pressure due to debt obligations, Vanke, a leading developer in China, is grappling with issues such as sluggish sales, declining revenue, and liabilities worth a total of 1.28tn yuan.

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Vanke is partly state-owned and has received more support from the government than its counterparts, reported the news agency.

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The company has three notes maturing in the coming year – at March, May, and June.

Forecasts from investment banks and securities houses, including Goldman Sachs Group and Morgan Stanley, suggest that the slump in China’s real estate sector is likely to persist into the next year.

Considering this, Vanke’s decision to sell its stake aligns with its efforts to adapt to the evolving market conditions, reported the media outlet.

Meanwhile, Vanke has agreed to acquire Banyan Tree’s shares in a hotel business named Banyan Tree Assets (China) Holdings for 30m yuan.

In September, Banyan Tree Group and Ennismore, both subsidiaries of the Accor Group, partnered with Dubai Holding to open the Banyan Tree Dubai resort at Dubai’s Bluewaters in November.

The resort features 179 rooms, including 30 suites, and replaces the existing Caesars Palace Dubai.