Source: Securities Times
Currently, the real estate market is still undergoing an adjustment period, and the market is closely watching the debt conversion and insurance payments of insured housing enterprises.
March 28,$CIFI HOLD GP (00884.HK)$An announcement was announced on the Hong Kong Stock Exchange that trading of the company's shares was temporarily suspended at 9:00 a.m. on March 28.
Xuhui Holding Group previously announced that it is seeking an overall solution to its offshore debt and has suspended repayment, so it is not expected to pay 555 million US dollars of 6.55% senior notes due on March 28 on time. Failure to pay the principal amount at maturity will constitute a default event on the March 2024 notes and other debt securities listed by the company on this exchange.
Previously, the company had announced the payment rollover period for 2 bonds “21 Xuhui 01” and “22 Xuhui Group MTN001”.
According to Xuhui's official microdata, the company completed the delivery of 118,000 new housing units in 2023, the highest number of deliveries since its establishment. As of March 18, Xuhui had 43 projects on the “white list” nationwide, and some projects have begun to meet financing needs.
Under pressure to return capital, many housing enterprises chose to actively dispose of their existing assets to supplement capital liquidity. According to the announcement, on February 14, CifistLeonardsPTYLTD, an indirect non-wholly-owned subsidiary of Xuhui Holding Group, sold 60% of the rights in 16 parcels of land located in Sydney, Australia, to an independent third party, at a cost of 66.3 million Australian dollars (approximately HK$339 million).
Xuhui Holding Group believes that the sale can ease the pressure on the company's overseas liquidity and provide capital for business operations, and the company has been actively seeking opportunities to sell overseas assets. Due to Australia's interest rate hikes and rising construction costs, it is expected that the property's financing costs and development costs will rise. “The sale allows the company to avoid additional costs and further pressure on overseas liquidity”.
According to monitoring by the China Index Research Institute, the real estate industry carried out a total of 10 mergers and acquisitions in February 2024, a decrease of 7 from the previous month. Judging from the type of business subject to the transaction, recent mergers and acquisitions in the real estate industry include two types of projects: real estate development and commercial management. Among them, real estate development businesses account for more than 80% of the volume and scale. Housing enterprises speed up the return of capital by continuing to sell project shares to repay debts.
Liu Shui, director of enterprise research at the China Index Research Institute, said that housing enterprises currently need to seize policy opportunities to actively finance, and can “cut back on open source” in terms of both inventory and growth. In terms of existing debt, housing enterprises can use existing policies to continue debt and carry out reasonable extensions, thereby optimizing the debt structure. Housing enterprises can use credit enhancement support policies and use credit enhancement methods such as credit protection tools and joint liability guarantees to “borrow new and return old” by issuing bonds, thereby optimizing the debt structure.
At the same time, financial regulations 16 support reasonable extensions of stock financing such as development loans and trust loans. Housing enterprises can negotiate with financial institutions and investors to extend debt periods, thereby relieving current debt pressure and reducing the risk of default.
In seeking increased financing, enterprises should grasp the latest policies, revitalize operating assets, and expand financing channels, thereby increasing safety cushions. First, housing enterprises can use the urban real estate financing coordination mechanism to push projects to the supervisory authorities to obtain financing to ensure the smooth progress of the project. Second, housing enterprises can revitalize operating properties by issuing ABS, REITs, etc., and can also use operating property loans to repay stock loans and open market bonds by the end of 2024. Finally, housing enterprises can use the “Three Major Projects” policy support to seek financing support for projects such as urban village renovation and allotment of guaranteed housing.
editor/tolk