China's Chengtong Holdings Group, a state-owned investment and asset-operating company, is in talks with Russian real estate developer Hals Development to buy the Peking Hotel in central Moscow, three sources familiar with the talks said.
VTB, which owns Hals Development, confirmed plans to sell the hotel and that it was talking to Chengtong Holdings Group and other potential buyers, adding it planned to reach an agreement before the end of 2018.
Russia's real estate market has been under pressure since 2008-09, further hit by a sharp rouble fall in 2014, which resulted in a spike of the rental costs and loans, as many contracts were linked to the US dollar.
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As a result, some of the real estate developers went bankrupt, some - like Hals - were taken over by their creditors. VTB, Russia's second-biggest bank, took Hals over in 2009 in exchange for restructuring its debt.
Marking An Expansion
The Peking deal, if it goes ahead, would mark an expansion for the Chinese state company, which manages assets worth 55 billion yuan ($8 billion) globally. The Chinese company owns Greenwood business park in Moscow.
For Hals, the deal would reduce its debt to VTB. One real estate consultant told Reuters that Hals was looking to raise around 6 billion roubles ($91.14 million) from the deal.
In an interview with Reuters in January, VTB chief executive Andrey Kostin said that Hals planned to sell real estate assets worth 22 billion roubles this year. The bank plans to sell Hals after recovering the company's debts, Kostin has said.
The Peking Hotel, built in Stalin's Empire style, opened its doors in 1956 and was a symbol of friendship between the USSR and China. It hosted many star guests, including French actors Marina Vlady and Marcel Marceau.
Hals declined to comment. China Chengtong Holdings Group's office did not reply to numerous phone calls, while the Greenwood company did not reply to a request for comment.