Intelligent Finance and Economics APP news, Peking China (00899) announced that the group entered into an acquisition agreement on February 28, 2017, to purchase a number of office properties and underground parking lots (Beijing property) in the third phase of the Beijing International Convention and Exhibition Center supporting facility project. The group has paid RMB 0.2 billion as a deposit. The Beijing property was originally expected to be completed by December 2023 and delivered to the group in June 2024. However, as of the year ended March 31, 2024, the group observed that the development speed of the Beijing property was getting slower. As many property developers in China were facing financial difficulties during the year, the group was also concerned that the seller of the Beijing property might not be able to complete the construction of the Beijing property. In order to protect the interests of the company and its shareholders as much as possible, the group quickly met and negotiated with the seller. The seller indicated that there might be difficulties in completing and delivering the Beijing property according to the schedule in previous agreements.

The announcement stated that the group has appointed Chinese lawyers to contact the seller regarding the transfer and return of the property.

The seller has proposed to transfer a total of 10 properties and 106 parking spaces to the group as the return deposit. These properties and parking spaces are commercial properties located in the Longxiangyu Jinghua Garden on Yufeng Road, Shunyi District, Beijing, with total building areas ranging from 177 square meters to 793 square meters each. As of the date of this announcement, the group has received 4 properties, while the remaining 6 properties and 106 parking spaces (remaining return properties) are still pending delivery to the group.

In the current unfavorable market environment, especially in the Chinese property market, the company's primary task is to protect its assets as much as possible. Regarding the Beijing property, the group has paid a deposit of RMB 0.2 billion, and ensuring the return of the deposit is the top priority for the group. In considering whether to exercise its contractual rights under the acquisition agreement and take legal action against the seller, the group would inevitably incur substantial legal costs and time, and there is no guarantee that even if the group wins in the litigation against the seller, it will be able to fully recover the deposit and other compensation. From a commercial and practical perspective, as a first step, the group has adopted a strategy to negotiate to mitigate its losses and recover funds from the seller as much as possible and as soon as possible. In fact, this strategy has been proven effective, and the group has promptly received cash compensation of RMB 8 million and 4 properties worth a total of approximately RMB 44.4 million from the seller, with a total value of approximately RMB 52.4 million. In terms of refunds and received compensations, the group can immediately proceed with other business plans and reduce opportunity costs in this area. It can also minimize the legal costs and time of recovering losses and compensations, as well as the need to compete with other creditors of the seller. Even though the combination of return properties and the Beijing property is different, the return properties are designated for commercial use, located in Beijing similar to the Beijing property, and according to the experience and professional knowledge possessed by the group's management, they still hold significant value. The group does not intend to hold the return properties for the long term, but is prepared to liquidate the Beijing property in the short term when market conditions allow and suitable buyers are identified.