The real estate financing environment is loose and the expectation is rising. Following the introduction of a number of policies to protect the capital chain of the real estate industry, at the end of last year, the central bank and the China Banking and Insurance Regulatory Commission once again expressed their support for high-quality real estate merger and acquisition financing.
Statistics show that in December 2021, the real estate industry has issued 46 domestic bond products, with a total amount of 43.284 billion yuan; The scale was further expanded compared with 39 in November and 42.12 billion yuan. Among them, China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) (001979) registered and issued bonds in the inter-bank bond market for mergers and acquisitions.
Some institutions predict that the overall financing environment of the real estate industry this year is relatively stable. Three types of mergers and acquisitions, including partner equity mergers and acquisitions, will take the lead, and ordinary project mergers and acquisitions may begin to appear in the second quarter.
further acceleration of bond issuance by real estate enterprises
Although throughout last year, real estate financing as a whole is still at a low ebb; However, since the fourth quarter, the financing situation has improved month by month.
According to the latest report of Kerui real estate research center, the financing volume of 100 typical real estate enterprises in 2021 was 1287.3 billion yuan, a year-on-year decrease of 26%, the first negative growth in financing volume in recent five years, and the amount reached the lowest point in five years.
However, the downturn began to improve in the fourth quarter of last year. Since September last year, the supervision has frequently voiced its voice to correct the financing policy, and the capital environment of the real estate industry has been significantly improved on the supply and demand sides. Since the Symposium of representatives of real estate enterprises held by the inter-bank market dealers association on November 9, Poly Developments And Holdings Group Co.Ltd(600048) (600048), China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Beijing Capital Development Co.Ltd(600376) (600376) and other real estate enterprises have issued medium-term notes in the inter-bank bond market.
According to the data of China Index Research Institute, the credit debt financing of the real estate industry increased by 197.1% month on month in November, which is close to the level in August. The first financial reporter also noted that the marginal easing of financing has been gradually transmitted from state-owned enterprises to private enterprises.
In December 2021, domestic bond issuance in the real estate industry accelerated again. The total issuance scale of domestic bond products such as corporate bonds, short-term financing, medium-term notes, directional tools and ABS reached 43.284 billion yuan, significantly higher than 18.682 billion yuan in October and 42.120 billion yuan in November.
In 2022, five products have entered the release period in just a few days.
In addition, since December 2021, 93 credit bond products have been updated and reviewed. As of January 5, 7 products have entered the status of pre evaluation / acceptance / feedback. From the perspective of issuing entities, nine were issued by private real estate enterprises, of which 790 million yuan of Jinke real estate ABS had passed the development and Examination Committee on December 31.
three types of mergers and acquisitions or take the lead in launching
After the dealers association gave priority to supporting M & A financing at the Symposium of representatives of real estate enterprises, the central bank and the cbcirc jointly issued the notice on doing a good job in M & a financial services for risk disposal projects of key real estate enterprises at the end of December to encourage banking financial institutions to carry out M & a loan business of real estate projects in a stable and orderly manner, Support high-quality real estate enterprises to merge and acquire key real estate enterprises.
On December 30, 2021, Zou LAN, director of the financial market department of the central bank, explained that project M & A among real estate enterprises is the most effective market-oriented means for the real estate industry to resolve risks and realize liquidation. In the long run, it is conducive to the reduction of assets and liabilities of highly indebted enterprise groups and protect the legitimate rights and interests of housing consumers, It is conducive to guiding all market subjects to pay more attention to the risk assessment and management of the project itself, forming a new real estate development model and promoting the virtuous cycle and healthy development of the real estate industry.
Some enterprises have heard the wind. China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) recently announced that the company plans to register and issue medium-term notes of 3 billion yuan in the inter-bank bond market, of which no more than 1.5 billion yuan will be used to support enterprises with strong synergy in the industry to alleviate liquidity pressure, including but not limited to replacing the issuer’s early investment funds and subsequent asset investment and acquisition, and the remaining funds will be used to repay the company’s bank loans.
Prior to this, a number of real estate enterprises have started mergers and acquisitions of property assets. In particular, some leading real estate enterprises are seizing the opportunity to gather high-quality resources, including Shimao service and country garden, which raise funds by placing shares in the Hong Kong stock market.
Some institutions predict that high-quality real estate enterprises with low net debt ratio in the future will also have the opportunity to participate in the issuance of M & A bonds.
Even so, industry insiders believe that the number of M & A cases will not increase sharply.
Citic Securities Company Limited(600030) Chen Cong’s team recently pointed out in the research report that project M & A is the main way to alleviate the delivery concerns of buyers. Under the background of poor overall sales performance of real estate enterprises, low profitability of development projects and too few enterprises with abundant funds, the current real estate development projects will not be carried out generally, and there may be three types of special mergers and acquisitions at the level of M & A projects. These three types of special mergers and acquisitions include the equity of partners, mergers and acquisitions with the strong support of borrowers and mergers and acquisitions with light asset management platforms. After March this year, with further abundant funds, M & A of ordinary projects will also appear.
how can real estate enterprises survive 2022?
However, compared with the strong head real estate enterprises, most enterprises will still face huge debt pressure in 2022.
According to Kerui data, in 2022, real estate enterprises had 629.8 billion yuan of matured debt, which was 21% lower than that in 2021, but due to the expansion of the “scissors gap” between bond issuance and matured debt, there was still great debt repayment pressure.
In particular, under the background of individual real estate enterprises’ liquidity crisis, debt default and agency rating downgrade, it is more difficult for real estate enterprises to issue us dollar bonds. According to Zheshang Securities Co.Ltd(601878) statistics, US $62 billion of debt is due, higher than US $58.6 billion in 2021, accounting for 70% of the debt due from January to July.
The good news is that with the improvement of China’s financing environment, there has been a marginal recovery in the secondary market of US dollar bonds.
Since the end of 2021, in addition to an additional USD 150 million bond issued by Xuhui group, Greentown China and Greenland Holdings Corporation Limited(600606) have also issued new USD bonds respectively. Many small and medium-sized real estate enterprises are striving to extend the maturity of USD bonds and seek debt repayment funds in multiple ways.
Taking Zhengrong real estate as an example, at the end of December last year, the company obtained bilateral loans totalling about HK $550 million from two offshore banks to repay its existing debts; On January 5 this year, it was announced that it had obtained a credit line of Bank Of China Limited(601988) 9.14 billion yuan.
Zheshang Securities Co.Ltd(601878) analyst Yang Fan believes that mergers and acquisitions can promote the clearing of production capacity, but it takes time. As long as 2022 with high capital pressure is passed, the real estate industry can obtain short-term financial security. On the sales side, enterprises can reduce prices and promote sales within the allowable scope, accelerate de industrialization, strengthen cooperation with local banks, obtain more mortgage lines and cooperate in development; On the debt repayment side, in addition to relying on M & A loans to support the sale of assets, we can also revitalize the stock real estate by repurchasing mature debts in advance, optimizing the debt structure, dismantling subsidiary companies for listing, introducing war investment, using REITs and asset securitization.
However, in the long run, most institutions believe that the real estate industry is gradually bidding farewell to the era of “high leverage + high turnover”, and diversified asset light operation is the main way to enhance resilience.
For the financing policies of real estate enterprises in 2022, Kerry Rui analyzed that the main idea of reducing leverage in the industry remains the same. According to the relevant real estate policies in the fourth quarter of 2021, it is expected that the overall focus will still be on maintaining stability.
Lu Zhe, an analyst at deppon securities, also said that in the future, under the framework of “housing, housing and non speculation”, the long-term policies such as “three red lines” and loan concentration will not be relaxed, which indicates that the financing of real estate enterprises will not be greatly relaxed, and the policy probability will support the bottom real estate investment through the two directions of demand side inter city regulation and protection of real estate construction.
“This round of reshuffle is more beneficial to real estate enterprises with a slower pace of development before, and such enterprises have a better chance to survive.” A person from the real estate industry told the first financial reporter.
(First Finance)
