Dalian Wanda Group, which is owned by China's richest man Wang Jianlin, has reached a preliminary agreement to sell its historic Madrid skyscraper to a Spanish developer Baraka Global Invest SL for $300 million, the company revealed on Friday to the Hong Kong stock exchange.

Its unit Wanda Hotel Development Co. signed a memorandum of understanding (MOU) on July 12 to sell Edificio Espana, which overlooks the Royal Palace and Plaza de Espana.

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The 25-story prime property, which was built in the 1950s under the dictatorship of General Francisco Franco, was sold a bit higher than the $290 million Wanda paid to Spain's Banco Santander to acquire the Spanish landmark. According to Shanghai Daily, Baraka has put down around $1.097 million as earnest money.

The deal is expected to be finalized on October 15 this year. However, the Chinese company made clear that "The Board wishes to emphasize that the MOU may or may not lead to any formal agreement."

The sale follows after Wanda failed to reconvert the building into the residential-and-hotel and shopping center project it initially planned. The company faced hurdles from the local government, which vowed to oversee big building projects approved by the former conservative council. According to China Central Television early this year, Madrid under new anti-austerity Mayor Manuel Carmena refused to approve Wanda's request to carry out the extensive reform work.

"If it fails, we would sell the building and never invest in Spain again," Wang said in the interview. He further added that this will serve as a "lesson" for Wanda and other Chinese businesses when entering foreign markets. He noted that planning permission should always be taken into consideration when investing.

TagsWanda, Dalian Wanda Group, wang jianlin, Baraka Global Invest, Madrid, Spain, china, Edificio Espana