The operator of a leading Chinese real estate portal, SouFun, won’t take an ownership stake in Century 21 China Real Estate after all, as the struggling franchisor of the Century 21 brand in China was unable to obtain third-party consent to a deal that would have made SouFun its “strategic partner.”

Under the terms of agreements announced in October, SouFun was to have taken a $51 million stake in Century 21 China, which would have made it the second-largest shareholder in the company.

The companies planned to form a “mutually preferred strategic partnership” across business lines including advertising, e-commerce, listings services, Internet and real estate financing, and secondary and primary brokerage services.

Those plans unraveled because Century 21 China did not obtain third-party consent within 60 days, as stipulated by the agreements, SouFun announced today. Century 21 issued its own statement, saying the agreements were  terminated “due to the fact that the parties did not reach agreement with respect to third-party consent to the transaction.”

News that the deal had fallen through sent shares in IFM Investments Ltd., the company that does business as Century 21 China, plummeting more than 30 percent in morning trading on the New York Stock Exchange today. In August, the stock exchange gave the company 18 months to bring its market capitalization back above the minimum required $50 million. Before today’s drop in share price, IFM Investments was valued at around $13 million, according to Yahoo Finance.

Century 21 China has been struggling since last year, when Chinese authorities introduced measures intended to curb real estate speculation. The measures included new capital gains tax regulations, higher down payment ratios, ceilings on new home prices, and limits on investor purchases.

In its most recent quarterly report to investors, IFM Investments posted a $4.1 million net loss for the third quarter, with revenue down 38 percent from a year ago, to $20.6 million. Most of the company’s revenue ($13.7 million) came from company-owned brokerages, primary and commercial services ($3.7 million), and mortgage settlement services ($2.7 million). Revenue from franchise services totaled $500,000.

In July, Century 21 China announced an agreement with the Lending Club of China aimed at funneling cash from investors into home loans. In September, IFM Investments announced that Century 21 China Real Estate subsidiary Shanggu had started advertising listings on Alibaba Group’s, an Chinese shopping site.

Century 21 China Real Estate CEO Donald Zhang said in a statement that while company-owned brokerages “continued to be affected by challenging market conditions in the third quarter,” he was pleased by “the solid growth of our financial services segment.”

The company continues to downsize in order to reduce expenses. As of Sept. 30, the Century 21 China Real Estate Network employed about 10,900 sales professionals and staff working out of 835 offices in 23 cities. That’s down from 865 offices and 11,800 sales professionals at the end of June.

“The efforts we’ve made over the past several quarters position our business to be more efficient and more profitable in the long term,” said Century 21 China President Harry Lu, and have resulted in “a significant improvement in both cash flow and bottom-line performance.”

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription