Recently, several listed real estate companies, including Country Garden, Sunac China, and China Fortune Land, have announced new progress in their debt restructuring. Since the beginning of 2024, multiple ministries and commissions have proposed establishing an urban real estate financing coordination mechanism and a “whitelist” for corporate financing. Over the past year, supportive policies for the real estate industry have been frequently introduced, with notable effects. Institutions believe that the focus of debt resolution in the real estate industry is expected to shift from extensions to debt reduction, and real estate companies should fully utilize various financing policies to increase capital inflows.
Multiple Real Estate Companies Make Progress in Debt Restructuring
On January 21st, Sunac China announced on the Hong Kong Stock Exchange that the restructuring plan for 10 bonds issued by its wholly-owned subsidiary, “Sunac Real Estate,” had been approved by the relevant bondholder meetings. The company will adjust the principal and interest repayment arrangements for the 10 bonds and provide restructuring options including bond repurchases, stock or stock-linked economic interest redemptions, and debt-for-asset swaps. Next, Sunac Real Estate will arrange for bondholders to select and allocate among the restructuring options for their held bonds.
On the same day, Country Garden resumed trading on the Hong Kong Stock Exchange. The company announced that it had met all the requirements for resumption of trading. At the same time, the company has formulated multiple plans to alleviate liquidity pressure and improve its financial situation. These include actively implementing debt management measures and considering payable amounts in annual cash flow forecasts to address temporary pressures. Earlier, on January 9th, Country Garden disclosed the progress of its offshore debt restructuring, which is expected to reduce debts by up to USD 11.6 billion, offering creditors multiple options such as tender offers, mandatory convertible bonds, and new notes.
The resumption of trading of Country Garden significantly boosted market sentiment. On the first day of resumption, the company’s stock rose nearly 30% intraday and closed with a 17.53% increase. In the A-share market, as of the 21st, the Shenwan Real Estate Index had recorded four consecutive days of gains. Stocks such as Vanke A, Xinhua Union, China Communications Real Estate, and Gemdale Group had achieved multi-day increases and generally emerged from their previous stock price troughs.
Liu Shui, Director of Enterprise Research at China Index Academy, analyzed that Country Garden’s offshore debt restructuring has taken an important step. If the plan can be implemented, it will significantly deleverage Country Garden. According to the key terms of the restructuring proposal announced by Country Garden, the company has reached a consensus with a coordination committee composed of seven reputable banks, aiming to implement the group’s offshore debt restructuring plan.
Furthermore, among Hong Kong-listed real estate companies, Shimao Group announced on January 16th the latest developments regarding its offshore debts, stating that the company is seeking approval to convene creditor meetings. Longfor Group also announced on January 10th that its creditor group had reached a consensus on the overall restructuring plan and signed a creditor support agreement on the same day, marking an important milestone in the company’s overall debt restructuring process.
A-listed real estate company China Fortune Land announced on January 20th that to implement and advance the company’s debt restructuring plan, it has established a trust plan with its wholly-owned subsidiary Gu’an Information Consulting as the entrustee and initial beneficiary, using Gu’an Information Consulting’s 100% equity in Yunuo Jin valued at RMB 1 million and its claims totaling RMB 25.584 billion against Yunuo Jin and its 11 subsidiary project companies. The trust plan is intended to offset financial debts totaling no more than RMB 24.001 billion.
China Fortune Land stated that as of the disclosure date, the transaction amount for debt offset through the trust plan is RMB 22.348 billion, and the remaining RMB 1.653 billion in trust share offset transactions are in progress. It is worth noting that the company’s previously announced progress in the implementation of major asset sales and related party transactions showed that as of November 30, 2024, the amount of financial debt restructured through agreements and other means in China Fortune Land’s debt restructuring plan totaled approximately RMB 190.032 billion.
