Debt-laden property developer Greentown China Holdings Ltd <3900.HK> said on Thursday that it and several other domestic firms had agreed to sell their stakes in a Shanghai commercial project to SOHO China Ltd <0410.HK> for 4 billion yuan (409.2 million pounds).

In a filing to the Hong Kong exchange, Greentown said it would receive 1.04 billion yuan in proceeds from the sale, which would improve the gearing level and strengthen the financial position of the group.

Shares of Greentown have fallen about 60 percent in the past 12 months amid investor concerns about the impact of a relentless government crackdown on property speculation and its ability to access funding.

Greentown has vowed to slash its net gearing ratio to below 100 percent in 2-3 years as it refrains from buying land to focus on property sales.

The firm had net gearing of 163 percent at the end of June, up from 132 percent at the end of 2010, making it the most highly-geared Chinese property developer listed in Hong Kong.

The high gearing ratio was caused by the firm's aggressive expansion over the past few years when China's property market was booming and it borrowed heavily to boost its land reserves, its CEO told Reuters in September.

SOHO China said it a separate statement that it would buy a 50 percent interest in a commercial property project in Shanghai's Huangpu District from Greentown, Shanghai Zhendai Property Ltd <0755.HK> and Shanghai Panshi Investment Management Co Ltd to further expand its business in the metropolis.

Greentown currently holds a 10 percent stake in the project, while Shanghai Zhendai and Shanghai Panshi own 35 percent and 5 percent, respectively, Greentown said.

Privately-controlled Chinese conglomerate Fosun International Ltd <0656.HK> will continue to hold its 50 percent stake in the project after the deal.

After development, the project, a 45,472-square-metre land in Shanghai's historic Bund district, will have above-ground gross floor area of 271,529 square metres and an additional 151,296 square metres of underground space, according to SOHO.

The land is designated for mixed office, retail, financial and cultural uses, SOHO said.

(Reporting by Joy Leung and Alison Leung; Editing by Charlie Zhu and Jonathan Hopfner)