Hoang Anh Gia Lai Joint Stock Company (HAGL, HAG) has just announced a resolution on selling Hoang Anh Gia Lai Hotel at 1 Phu Dong, Pleiku City, Gia Lai to pay off bank debt.
Back in the past, this used to be the "golden goose" sector, helping Mr. Duc become one of the richest people on the Vietnamese stock market. But now, a series of once-famous real estate projects are almost no longer associated with his name.
Real estate used to be a "golden goose" but must be sold gradually
Starting out as a private enterprise producing wooden furniture, HAGL began diversifying its business lines in 2002 with rubber, finance, football and especially real estate.
In 2002, HAGL established a subsidiary, Hoang Anh Construction and Housing Development Joint Stock Company, marking a milestone in entering the real estate market.
In 2004, HAGL put into operation HAGL Resort Quy Nhon; in 2005, opened HAGL Resort Da Lat and in 2006, opened HAGL Hotel Pleiku, and handed over the Le Van Luong luxury apartment complex in Ho Chi Minh City.
Real estate used to be the "golden goose", especially in the period 2006-2012, becoming the mainstay of HAGL and always leading in annual revenue.
Notably, in 2009, the construction and distribution of projects: New SaiGon Apartment Complex (Nha Be District), Hoang Anh River View (District 2), Phu Hoang Anh Apartment Complex Phase 1 (Nha Be District) and Hoang Anh Gold House Apartment Complex (District 7) brought in revenue of more than 3,300 billion VND, accounting for 77% of the total revenue of the year.
However, since 2010, when the real estate industry faced difficulties, HAGL sold its HAGL Resort Quy Nhon branch for VND175 billion and recorded a net profit of VND99.2 billion.
By 2012, HAGL completed the sale of HAGL Resort Da Lat. This transaction was not widely announced, but the financial report for this year recorded HAGL Resort Da Lat as a short-term investment worth VND81.8 billion (approved for liquidation to a third party but legal procedures have not been completed).
Also from 2012 onwards, Mr. Duc gradually withdrew capital from real estate when the domestic market was in recession, gradually selling land funds that were the company's strengths to focus all his efforts on agricultural development in Laos and Cambodia.
2019 withdrawal from real estate
Abroad, in 2013, HAGL invested in the Myanmar market, starting the HAGL Myanmar Center Complex project.
This office building, shopping mall and 5-star hotel officially began operating in August 2016.
The project includes a system of Trade Center - Office - Hotel - Conference Center - Apartment for rent. The estimated construction investment capital for phase 2 is about 10,000 billion VND, the cost of upgrading phase 1 is 535 billion VND. The total investment capital of the Myamar Project is 16,000 billion VND.
Phase 1 of the project, including hotels, offices and a commercial center, has been put into operation since 2015 and has generated stable revenue for HAGL over the years. Phase 2, including apartment and office blocks, began construction in 2016.
Despite high expectations, HAGL finally decided to "let go" of the HAGL Myanmar Center project.
Specifically, after the strategic cooperation between HAGL and Truong Hai Auto Corporation (Thaco) in August 2018, HAGL transferred 65% of this project to Dai Quang Minh Construction Investment Company - a real estate enterprise of Thaco.
By September 2019, HAGL transferred the remaining 196.3 million shares, equivalent to 47.93% of the charter capital of HAGL Land - the company managing HAG's real estate sector with the main project being the HAGL Myanmar Center complex to Dai Quang Minh Construction Investment Company.
Thus, with the completion of the sale of all remaining shares, Mr. Duc's company has almost completely withdrawn from the real estate sector.
As VietNamNet reported, HAG sold the Hoang Anh Gia Lai Hotel in Pleiku to pay off part of the bond debt issued in 2016 at the Bank for Investment and Development of Vietnam (BIDV). All proceeds from the sale of this asset will be given priority to pay off the bond obligations at BIDV.
As of June 30, 2023, the outstanding bond balance at BIDV accounted for the largest proportion with VND 5,271 billion. Of which, the accumulated late payment interest amount up to September 30, 2023 was nearly VND 2,871 billion, the late payment principal amount was VND 1,157 billion.
According to the 2022 financial report, HAGL recorded about 293 billion VND in revenue from other services, including a part from hotel business.
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