After two years of deep adjustment in the real estate industry, it finally evolved into a new level of credit storm in this coldest sales season, and Country Garden and even Sino-Ocean and other leading real estate enterprises with the background of central enterprises also had undercurrents and had to start debt restructuring.
On September 15, Sino-Ocean Group, which has been in a tight capital chain for several months, made a big move, directly suspending the payment of all overseas debts and suspending trading of its eight US dollar bonds, and carrying out a comprehensive restructuring of overseas debts.
Sino-Ocean Group admitted that since 2023, under the situation that the industry sales and financing environment have not been significantly improved, Sino-Ocean Agreement sales have declined rapidly, asset sales have increased, various financing activities have continued to be restricted, and it is expected that liquidity will still face challenges in the short and medium term.
"The Group believes that the best way forward is to fully restructure its offshore debts to ensure that creditors are treated fairly and equitably, provide a sustainable capital structure and lay the foundation for the Group's stable operations." Sino-Ocean said.
This is foreshadowed. In order to maintain credit and repay debts on schedule, Sino-Ocean has also struggled to support it. In the first half of the year, Sino-Ocean suspended land acquisition and accelerated its decentralization, and on the other hand, sold the remaining 50% equity of Sino-Ocean Taikoo Li in Chengdu and other core assets to regain blood. However, since June, the group has still experienced illiquidity, and the funds available for debt repayment have almost dried up.
Although Sino-Ocean has since extended a number of individual notes and forgiven defaults, the total amount of debt is still large, and a debt management and risk management package is urgently needed to achieve long-term sustainable operation.
According to the report, in the first half of the year, Sino-Ocean Group's total agreed sales were 35.66 billion yuan, down 17% year-on-year, the turnover was 20.807 billion yuan, down 11% year-on-year, and the net profit attributable to the parent was -18.369 billion yuan; at the same time, Sino-Ocean's total cash resources (including cash and cash equivalents and restricted bank deposits) totaled 7.650 billion yuan, short-term liabilities alone reached 44.616 billion yuan, and total interest-bearing liabilities were about 94 billion yuan.
Under pressure, Sino-Ocean finally chose to carry out a comprehensive overseas debt restructuring.
Bai Wenxi, chief economist of IPG China, said that through this debt restructuring, Sino-Ocean Group can gain more time to deal with the current liquidity problem, avoid the spread of the capital chain break crisis caused by debt default, provide certain guarantees for the company's stable operation, and help it adjust its debt structure to better cope with future market changes.
This is also an important event for the industry. Bai Wenxi said that this is the first case of comprehensive restructuring of overseas debts of central enterprise real estate developers, which were all private housing enterprises before.
"This reflects the greater pressures and challenges in the real estate industry right now." Bai Wenxi said.
It is worth mentioning that more than two months ago, two major shareholders of Sino-Ocean sent a joint working group to settle in Sino-Ocean, and more than a month ago, Sino-Ocean Group obtained an opportunity to forgive a debt default, both for the first time in the real estate industry.
Behind Sino-Ocean's persistence and helplessness, the real estate industry is at an unprecedentedly severe critical moment, the chill of the coldest sales season has not faded, the financing is difficult, and even the central state-owned real estate developers are also straining the capital chain.
A number of insiders of real estate companies said that although some funds have been raised this year, but now the approval is slow, the quota has been cut, and it is only better than before the issuance of bonds, far from the degree of optimism.
The above-mentioned person said: "The money raised is a drop in the bucket compared with the real expenditure of the real estate company, and the amount of guaranteed payment every month is very large, as well as the just redemption of bonds and loans."
The good news is that with the frequent emergence of epic rescue policies such as "recognizing housing but not recognizing loans" in all first-tier cities, the darkest moment of housing companies is also expected to pass.
CITIC Securities predicts that the recovery of housing sales is a prerequisite for the credit recovery of the real estate industry chain. With the blessing of policies, the mid-term inflection point of credit recovery is also coming; Yan Yuejin, research director of Shanghai E-House Research Institute, also believes that the subsequent first-tier cities will have a good market in Jinjiuyin Ten, which is conducive to the layout of first- and second-tier cities, especially real estate enterprises in Beijing and Shanghai.
Zhang Bo, president of 58 Anjuke Research Institute, also said that the bottom of the market has appeared, and the effect of the policy beyond expectations will be reflected in September, and the overall performance of the Beijing market in September will be significantly better than in August.
At that time, in the recovery of the real estate market brought by this new policy, including Sino-Ocean, the first- and second-tier housing enterprises with heavy positions will benefit a lot, and even the real estate enterprises that have exploded before are expected to be revived, such as Sunac has tasted the sweetness of the new policy, and the total subscription amount of Beijing Sunac No. 1 Courtyard reached 5.62 billion yuan on the first day of opening.
Chen Cong, an analyst at CITIC Securities, also predicts that the fundamentals of the real estate market will stabilize and recover from September, gradually accelerate the recovery, and sales will improve significantly in the fourth quarter of 2023, and commercial housing sales are expected to achieve positive growth throughout the year.
Relevant people of Sino-Ocean said that in the future, Sino-Ocean will continue to focus on cash flow in a multi-pronged manner, on the one hand, "concentrate all necessary resources" to ensure the delivery of buildings, on the other hand, accelerate sales reduction, improve payment collection and financing projects, and accelerate the disposal of assets located in first- and second-tier core cities and reduce costs and increase efficiency.
Zhang Bo analyzed that whether the company can get out of the trough in the future, it is necessary to rely on sales to accelerate the return of cash, in order to achieve a real turnaround. In addition, from the perspective of the settlement of major shareholders, the attention to the follow-up development of Sino-Ocean is increasing, and the next step is expected to strengthen internal operation control, and support at the capital level is not excluded.
After experiencing the debt restructuring of many leading real estate enterprises such as Country Garden, R&F and Sunac, creditors are increasingly realizing that instead of sinking the ship together, it is better to negotiate debt restructuring together and go ashore together; The experience of debt restructuring of real estate enterprises is also becoming more and more mature, and they are willing to take credit enhancement to express their position, extend the adjustment of interest rates, debt-to-equity swaps and other fancy measures to arrange for a combination of measures, and many real estate enterprises have returned to the right track of operation.
After the fall of many housing companies, the real estate industry can no longer withstand the fall of another giant, debt restructuring, business continuity, is becoming a more common consensus between housing enterprises and creditor games.
The survivors of this industry will join the recovery battle of the property market, and the king of the new real estate rivers and lakes will also be born from it.