BEIJING (TheStreet) -- As recently as March, the Nasdaq-listed property developer China Housing and Land Development (CHLN - Get Report) was still boasting in Securities and Exchange Commission filings about great growth potential in "fast-growing tier II and tier III cities in western China."
But at that time China's real estate market -- a pillar of the nation's economy -- had already started a slump that's continuing today. Hardest hit are smaller cities including the tier II city of Xi'an, where China Housing does most of its building.
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So it may have been no surprise to anyone who watches China and its U.S-listed companies when China Housing announced Monday a plan to go private and leave the Nasdaq Global Market. Trading was suspended in the stock, which listed in 2006 and was down 27% for the year to date.A company press release said shareholders would be asked to approve a board plan for "a reverse stock split shares of our common stock, whereby every 50,000 shares of our common stock issued and outstanding will be converted into one whole share of our common stock." Smaller stockholders would get $1.75 per share from the company's cash on hand. China Housing did not give a reason for the move, but the weakening property market may have played into the decision. The company, in its March SEC filing, said that as of March 31, "we had $14,935,316 in cash, compared to $21,320,071 as of December 31, 2013, a decrease of $6,384,755." It gave no further explanation. China's years-long real estate boom was fueled by speculation, urbanization and support from governments as well as state banks. The bottom started falling out last year when banks tightened lending, mom-and-pop real estate investors pulled back and developers started slashing prices on new homes to maintain cash flow. Between January and July, according to a National Bureau of Statistics report released last week, sales of residential floor space fell 9.4% nationwide from the same period last year. Commercial floor space sales declined 7.6%. Sales of whole residential buildings dropped 10%, the bureau said, while office building sales declined 14%. Read More: Galena Fires CEO Ahn, Offers No Parting Gifts Meanwhile, a research firm survey of 100 cities found the average price of a new home fell in July for the third consecutive month.