(Yicai) Nov. 25 -- Shares in Gree Real Estate surged by the exchange-imposed limit today after the Chinese property developer said that it is going ahead with the purchase of a majority stake in Zhuhai Duty-Free Enterprise Group, a major tax-free retailer, through an asset swap worth CNY4.6 billion (USD635 million).

Gree Real Estate’s share price [SHA:600185] closed up 10 percent at CNY8.64 (USD1.19). The company’s stock has gained 19.5 percent in value since the beginning of this year.

Gree Real Estate will exchange its 100 percent stakes in five property development subsidiaries, worth CNY5.5 billion (USD759.2 million), for 51 percent equity in Zhuhai Duty-Free that is currently held by state-owned investment firm Zhuhai Investment Holding, Zhuhai-based Gree Real Estate said on Nov, 22.

To cover the valuation difference, Zhuhai Investment will assume a debt of CNY500 million (USD69 million) to Gree Real Estate and pay the developer CNY426 million in cash to even out the balance. Zhuhai Investment owns a 45 percent stake in Gree Real Estate and a 77 percent stake in Zhuhai Duty-Free.

Gree Real Estate said in April that it planned to gradually exit the property industry due to the prolonged downturn in the sector, and that it would purchase a majority stake in Zhuhai Duty-Free, which operates duty-free outlets at a number of entry and exit ports in the city in southern Guangdong province. In July, Gree Real Estate confirmed that the acquisition would take place through an asset swap although it did not disclose the value of the deal at the time.

Gree Real Estate has been losing money since 2022 due to the sluggish real estate sector. In the first three quarters, its net loss almost tripled from a year earlier to CNY921 million (USD127.1 million), while revenue slumped 10 percent to CNY2.4 billion (USD331.2 million), according to the company’s latest financial report.

In the first half, Zhuhai Duty Free raked in net profit of CNY436 million (USD60.1 million) on revenue of CNY1.3 billion (USD179.4 million), according to Gree Real Estate.

Editor: Kim Taylor