Evergrande Is Struggling to Sell Homes—and Its Assets

Evergrande said Wednesday that its discussions with peer

Hopson Development,

which was interested in purchasing its property-management unit, have broken down. Under the plan, Evergrande’s 50.1% stake in the unit, Evergrande Property Services, would have been sold for $2.6 billion, a 28% discount to the unit’s last price before its shares were halted for trading earlier this month. Evergrande’s shares fell 13% Thursday.

Hopson said it can’t accept Evergrande’s request to send the payment directly to the parent company—rather than first depositing it with Evergrande Property Services—because that would make it difficult to recover money owed by the developer to its subsidiary. Evergrande Property Services had around $407 million in receivables and prepayments from related parties as of June.

This worry highlights just how difficult unwinding Evergrande will be. Suppliers and business partners will want to make sure they are paid in cash, and that any projects or assets they acquire—even good ones—can collect on receivables from related parties. Home buyers are also hesitant to buy from Evergrande given that apartments in China are usually sold a few years before they are delivered. But Evergrande is fast running out of any avenues to raise cash.

The company’s contract sales from Sept. 1 to Oct. 20 were only 3.65 billion yuan, equivalent to about $571 million, it said Wednesday. This includes the value of apartments it delivered to suppliers and contractors in lieu of repayment. That represents at least a 97% drop from last year, when its contract sales for Sept. 1 to Oct. 8 were 141.6 billion yuan.

Evergrande’s other asset-sale plans are seemingly going nowhere too. That includes its plan to sell its office building in Hong Kong. The developer bought the building from its longtime business partner

Chinese Estates

for $1.6 billion in 2015, which set a record of the most expensive office-building transaction in the city at that time. Nobody seems interested in buying its electric-vehicle subsidiary, which is mostly an indebted company yet to produce a single car, either.

The 30-day grace period for its $83.5 million missed coupon payment of its dollar bonds last month will be up this Saturday. The government doesn’t seem likely to step in, but it may have to later if Evergrande is finding it difficult to deliver apartments it has already sold.

A default for Evergrande seems a foregone conclusion. For China’s property market—and Evergrande creditors—the pain could go on for quite a while.

Write to Jacky Wong at jacky.wong@wsj.com