Since September, several listed real estate companies have successively announced progress in debt restructuring or financing activities.
According to institutional statistics, the financing scale of typical real estate companies increased both year-on-year and month-on-month in August.
Institutional analysis believes that the current real estate financing coordination mechanism is accelerating its implementation and effectiveness, and with recent changes in the external environment, the liquidity pressure on real estate companies is expected to be alleviated to some extent.
Some real estate companies have made progress in debt restructuring.
On September 20th, Guancheng Datong disclosed a prompt announcement regarding the full repayment of the debt to Oriental Assets, stating that Guancheng Datong issued corporate bonds "20 Guancheng 01" in July 2020.
In September 2022, the company cooperated with Oriental Assets on the "20 Guancheng 01" bond, with the latter paying off the principal of 1.73 billion yuan for the "20 Guancheng 01" bond.
Subsequently, Guancheng Datong and Oriental Assets formed a new creditor-debtor relationship, and with the consent of Oriental Assets, the company used assets such as 95% of the equity in the Sun Palace Company and 79.08% of the equity in Datong New Materials as collateral for the debt.
Guancheng Datong announced this time that as of June 30, 2024, the balance of the aforementioned debt was 858 million yuan.
As of September 20, 2024, the company has fully repaid the aforementioned debt and corresponding fund occupation fees to Oriental Assets, and the corresponding guarantee responsibilities of the company have been lifted, with subsequent procedures for the release of collateral to be handled.
Guancheng Datong also stated that the repayment of this debt will effectively reduce the company's asset-liability ratio and interest-bearing debt ratio, is expected to reduce the company's financial expense expenditure, and enhance the company's risk resistance capability.
On September 14, Huaxia Happiness announced the latest progress on debt restructuring and other matters, stating that as of August 31, 2024, the amount of financial debt in Huaxia Happiness's "Debt Restructuring Plan" that has been restructured through signing contracts and other means has accumulated to approximately 190.029 billion yuan (including domestic corporate bonds issued by the company and its subsidiaries, and restructuring of foreign dollar bonds issued by overseas indirect wholly-owned subsidiaries); as of August 31, 2024, the company's "Happiness Selection Platform" and "Happiness Preferred Platform" equity, built with the equity of its subsidiaries, offset a total amount of financial and operating debts of approximately 16.935 billion yuan.
Huaxia Happiness stated in the announcement that from August 1, 2024, to August 31, 2024, the company and its subsidiaries did not have any new default debts.
As of August 31, 2024, the total amount of debt that the company has not been able to repay on time has accumulated to 24.555 billion yuan.
In addition, companies listed in Hong Kong such as Yuzhou Group, China Aoyuan, Oceanwide Group, and Zhengrong Real Estate have also successively announced progress in debt restructuring in recent times.
Among them, Yuzhou Group's overseas debt restructuring plan has been approved by the majority of creditors.
Monthly financing scale increased both year-on-year and month-on-month.
In recent years, affected by factors such as high carryover costs, increased cost rates, stock reduction, and asset impairment, the net profit of listed real estate companies has continued to decline.
In the first half of 2024, the pressure from the sales and financing ends was transmitted to the balance sheets of listed real estate companies, with some companies experiencing a decline in monetary funds, leading to an increase in debt ratios.
However, since the second half of this year, the financing situation of real estate companies has seen a phased improvement.
The real estate financing data recently released by the E-House Research Institute shows that the financing scale of the 30 typical companies monitored increased both year-on-year and month-on-month in August.
In August, the 30 real estate companies issued domestic bonds of 22.01 billion yuan, an increase of 68.8% month-on-month and an increase of 26% year-on-year.
Looking at the financing channels, similar to last month, medium-term notes, general corporate bonds, and super short-term financing bills accounted for 58%, 28%, and 14% respectively.
Due to the increase in bond issuance by private and mixed-ownership enterprises such as Midea Property and Greentown China, the financing cost has risen slightly, but the overall financing cost is still at a historically low level.
The E-House Research Institute analysis pointed out that in August, the total repayment amount for the 30 real estate companies was 13.67 billion yuan, with a net financing amount of 8.34 billion yuan, which is a month with a relatively high net financing amount this year, second only to January and March, significantly alleviating the debt repayment pressure.
That month, 11 of the 30 real estate companies issued new bonds, an increase in the number of bond-issuing companies compared to the previous month.
It is worth mentioning that companies such as Binjiang Group and Midea Property issued new bonds at rates lower than the debt maturity rates, showing an optimization trend in debt structure.
On August 21, at the "Promoting High-Quality Development" series of thematic press conferences held by the State Council Information Office, the person in charge of the Financial Regulatory Authority introduced that the urban real estate financing coordination mechanism has achieved phased results.
The coordination mechanism, with cities as the main body and projects as the center, has supported real estate project financing with precision under the efforts of all parties.
Among them, commercial banks have approved more than 5,000 "white list" projects, with approved financing amounts close to 1.4 trillion yuan.
The reporter noticed that since September, financing activities of A-share listed real estate companies have been continuous.
On September 11, China Merchants Shekou announced that the company's public issuance of corporate bonds (second phase) in 2024 to professional investors meets the bond listing conditions of the Shenzhen Stock Exchange and will be listed from September 12.
On September 6, Tibet Urban Investment announced that the company's application for registration to publicly issue corporate bonds with a total par value not exceeding 800 million yuan to professional investors was approved by the China Securities Regulatory Commission.
In addition, the 2023 Annual Private Placement of A Shares to Specific Objects Prospectus (Revised Draft) disclosed by Pearl River Shares on September 6 shows that the company's private placement of shares to specific objects this time does not exceed 256 million shares (inclusive), and the total amount of funds raised does not exceed 748 million yuan (inclusive), all of which will be used to supplement working capital and repay debts after deducting related issuance expenses.
The effectiveness of the real estate financing coordination mechanism is becoming apparent.
"The urban real estate financing coordination mechanism is accelerating its establishment and effectiveness," Liu Shui, Director of Enterprise Research at the China Index Research Institute, analyzed and believed that in January of this year, the Ministry of Housing and Urban-Rural Development and the Financial Regulatory Authority jointly issued a document to guide the establishment of urban real estate financing coordination mechanisms in various places.
In June, the two ministries and commissions jointly issued a notice again, proposing a number of optimization measures to improve the efficiency and quality of "white list" project delivery, in order to further play the role of the urban financing coordination mechanism.
Liu Shui further stated that promoting projects that need financing support should be included as much as possible, which will help more projects in related fields to obtain financing support.
For projects that need to obtain financing support through the "white list" but have not yet met the conditions of the "white list" standard, specific requirements have been made for the implementation of responsibilities at all levels, such as the urban coordination mechanism urging banks to propose targeted opinions and suggestions, real estate companies need to take measures to repair problem projects as soon as possible, urban governments need to strengthen coordination, and promote projects that meet the "white list" conditions to be included as much as possible.
Analysts from the CRIC Research Center also believe that with the advancement of the urban real estate financing coordination mechanism, and the subsequent launch of project white lists in various places, the main body of financing support is sinking from enterprises to specific projects, which to some extent alleviates the liquidity pressure on real estate companies.
The analyst pointed out that for real estate companies that can still operate normally, the top priority is still to grasp the existing policies to do a good job of debt continuation, such as through credit support policies, using credit protection tools, joint liability guarantees, and other credit enhancement methods to issue new bonds to achieve "borrowing new to repay old", and also through the issuance of ABS, REITs, and other methods to activate operational properties, actively try to use operational property loans to repay existing loans and public market bonds.
In addition, real estate companies also need to actively negotiate with financial institutions and creditors to appropriately extend the debt term to alleviate the current debt pressure.
Institutions believe that the recent announcement by the Federal Reserve to cut interest rates will have a positive impact on existing dollar bonds and newly issued dollar bonds.
The E-House Research Institute analysis believes that for existing dollar bonds, the risk held by investors is reduced, and the repayment pressure will also be reduced.
At the same time, for new dollar bonds issued by real estate companies, the financing cost is reduced, which also helps high-quality real estate companies to further expand financing channels.
