Since 2022, real estate regulation policies have been adjusted in many parts of the country, and easing policies have shown a blowout trend. This has also brought the real estate industry a warm wind that has been lost for a long time. Under favorable conditions for loosening ties, the real estate industry is also expected to “hit bottom and rebound” in 2022, becoming an important main line of “steady growth.”
However, as far as the industry is concerned, even though real estate refinancing has been loosened, it seems difficult to resolve the financial thirst of housing enterprises. In particular, short-term debt is under pressure. The Zhitong Finance App learned that 2022 and 2023 are peak repayment years for Chinese real estate dollar bonds, with 2022 being the peak. Societe Generale Securities said that March-April and June-July 2022 was the peak maturity of real estate dollar bonds, as well as the peak of the total maturity of domestic and foreign bonds of housing enterprises.
Since the second half of 2021, Chinese-funded US dollar real estate bonds have ushered in a credit crisis, and whether the debt can be repaid as scheduled has become an important reference basis for testing the success of housing enterprises. Recently, Landsea Real Estate (00106), which operates under an asset-light model, once again set an example for the industry.
Landsea Real Estate actively manages debts and cancels US dollar bonds with early repurchases
On June 17, 2022, Landsea Real Estate announced that the company had repurchased a total of US$145.9 million of the US$200 million of priority notes issued by the company due to expire on June 20, 2022, and had cancelled all of them on the day of the announcement.
The company also stressed that the remaining payment funds of US$85.41 million have also been remitted to the bank account designated by the bill trustee and will be paid as scheduled on the due date.
According to information from the Zhitong Finance App, Landsea Real Estate issued bond repurchase announcements on October 20 and December 6, 2021, successively repurchased green priority notes with a total principal amount of about 72 million US dollars and 11.5 million US dollars of notes due in June 2022 on the open market. Additionally, Tian Ming, the controlling shareholder, executive director and chairman of the board of directors of the company, repurchased approximately $4 million of notes due in October 2022 on the open market.
With this series of actions, it is easy to see that the company has always been proactive in managing debt, using real money to convey confidence to the market through active communication with the market and early repurchases with its own funds.
Behind housing companies' bond repurchases based on their own qualifications and market earnings trends, it also reflects the management's confidence in the company's development, capital, and financial health.
Left hand small shares are built on the right hand, and the company has achieved “light weight to battle”
According to information from the Zhitong Finance App, since launching the asset lightweight transformation in 2014, Landsea Real Estate has vigorously carried out light capital industry businesses such as contract development, small stock trading, and cooperative development, reducing the traditional asset-heavy real estate model. Currently, the company has taken a leading position in the industry in contract construction, small share trading, cooperative development, etc. Recently, Landsea Real Estate was also successfully selected as the “2022 China Real Estate Agency Leading Brand”, ranking in the top five in the industry.
As of 2021, the company has developed a total of 83 contract construction services and small stock trading projects, with a total saleable area of about 3.78 million square meters. The estimated sellable value is about 70.62 billion yuan, accounting for about 91% of the total sellable value in China, with remarkable transformation results.
Tian Ming, chairman of the board of directors of Landsea Real Estate, once said in the chairman's report, “Since 2014, we have implemented a strategic transformation with product differentiation, asset weight reduction, and income diversification. 2022 will be a decisive year for us to complete our transformation and leap forward... I am confident that the company will transform, upgrade, survive, and develop into the future market.”
In line with the “14th Five-Year Plan” planning policies of the country and provinces, the direction of supply-side reforms in the real estate industry is becoming more and more clear, promoting the construction of affordable rental housing, and urban renewal may become a trend. At the same time, in the context of accelerated market integration, demand for small and medium-sized real estate agency business will gradually increase. According to research data from the China Index Institute, the penetration rate of China's contract construction industry in 2021 is 4.8%, while according to European and American countries' penetration rate estimates of nearly 30%, China's contract construction industry still has 5.2 times more penetration room, and the overall prospects for the contract construction market are promising.
In the context of industry regulation, the overall differentiation of the real estate industry is accelerating, and it is believed that housing enterprises with sound finances and operational advantages will be more favored by the market. In this context, Landsea Real Estate stands out from traditional “domestic housing stocks” with its asset-light strategic position as a green development service provider. Looking forward to the future, the “lightweight” Landsea Real Estate will definitely go through the fluctuations of the industry cycle and enter a new stage of industry development with a fresh attitude.