(Yicai Global) Nov. 17 -- Chinese real estate giant Greenland Holdings is selling 27 commercial properties in Shanghai and neighboring Jiangsu province worth a total of CNY23.1 billion (USD3.5 billion) in a bid to improve its leverage ratio and meet new financing terms set by regulators.

The properties are spread across 14 projects in key downtown areas next to subway stations and in mature commercial districts, according to a document seen by Yicai Global. The most expensive unit is priced at CNY62,000 (USD9,430) per square meter.

“Unfortunately there has not been much interest,” an industry insider told Yicai Global. Some of the properties are priced too high, although the company is willing to negotiate. “Every penny counts in order to meet the regulators’ requirements,” he added.

Business office sales are bad this year, a commercial property saleswoman surnamed Yu said, adding that many of Greenland’s projects are office spaces. Prices have dropped in recent years, putting great pressure on developers’ retail plans. Many are considering selling commercial projects through equity transactions, she added.

Selling properties is what the firm does, Greenland told Yicai Global. Properties are sold once completed or after a short-period of operation as part of its long-term strategies.

The People’s Bank of China and the Ministry of Housing and Urban-Rural Development set new financing rules for real estate firms in August to mitigate risks as the pace of borrowing reached record heights.

"Three red lines" were set up to control their scale of debt. These are a 70 percent upper limit of debt-to-asset ratio after excluding advance receipts, a 100 percent upper limit for net debt ratio and a one-to-one down limit ratio for cash against short-term debts.

Greenland fails to meet any of the three requirements. The Shanghai-based firm’s debt-to-asset ratio was 82.8 percent last year, its net debt ratio was more than double, and its cash-to-short debt ratio was 0.67, according to the company’s 2019 earnings report.

Property developers that do not meet these conditions will be prevented from adding further interest-bearing liabilities from January next year.

Editors: Tang Shihua, Kim Taylor