Financing. 
Summary. A number of real estate companies have completed debt restructuring, and the financing dilemma of the industry has not been resolved.
The whitelist system has opened the gates for the financing of real estate enterprises, and the policy support for private real estate enterprises has increased in the second half of the year.
At the end of 2022, the financing policy of real estate enterprises ushered in a turn, and the direction of relief changed from the previous "rescue projects" to "the coexistence of rescue projects and enterprises". Entering 2023, a number of departments have successively emphasized the need to promote the normal circulation of finance and real estate, and implement the "16 Financial Articles". At the same time, high-quality real estate enterprises and white-listed enterprises maintain financing advantages. On January 11, it was reported that the list of the first batch of improved balance sheets of high-quality real estate enterprises was released: Longfor, Country Garden, Xincheng Holdings, Sino-Ocean Group, Gemdale Group, Midea Real Estate, and Hangzhou Binjiang were listed. On January 31, the relevant departments of Henan Province screened the "white list" of 100 local real estate companies, including Jianye, Zhenghong, Yongwei, etc., to support the reasonable financing needs of real estate enterprises.
At the same time, there have been new breakthroughs in the revitalization of existing assets. On February 21, AMAC issued the "Guidelines for the Pilot Filing of Private Real Estate Investment", which allows investment in stock housing and market-oriented rental housing projects. In addition, on March 24, the National Development and Reform Commission issued the "Notice on Standardizing and Efficiently Doing a Good Job in the Application and Recommendation of Real Estate Investment Trusts** (REITS) Projects in the Infrastructure Sector" to support the issuance of infrastructure REITs for consumption infrastructure, give priority to supporting urban and rural commercial network projects such as department stores, shopping malls, and farmers' markets, and issue infrastructure REITs for community commercial projects that ensure basic people's livelihood.
In the second half of the year, the financing of real estate enterprises continued to increase, especially the financing support of private real estate enterprises. On July 10, the People's Bank of China (PBOC) and the State Administration of Financial Supervision (SFA) issued a notice extending the applicable period of the previous Notice on Doing a Good Job in Supporting the Steady and Healthy Development of the Real Estate Market to December 31, 2024. On July 19, the Communist Party of China issued the "Opinions on Promoting the Development and Growth of the Private Economy", proposing 31 measures around the private economy, including improving the financing support policy system, improving the market-oriented reorganization mechanism, and encouraging private enterprises to revitalize the stock of assets.
On August 27, the China Securities Regulatory Commission reported that the refinancing of listed real estate companies is not subject to the restrictions of breakage, net breakage and loss, and the equity financing of real estate enterprises is good again. On August 30, the People's Bank of China held a meeting to promote the development of financial support for private enterprises, in which New Hope, Longfor and Xincheng Holdings participated. According to the source, financial institutions were required at the meeting to formulate annual service targets for private enterprises and increase the weight of performance appraisal in the services of private enterprises. In October, the first financial work conference emphasized that it is necessary to promote a virtuous cycle of finance and real estate, and meet the reasonable financing needs of real estate enterprises with different ownership systems without discrimination.
In the fourth quarter, there were "three no less than" quantitative indicators, and a number of state-owned banks held a symposium on real estate enterprises.
It is worth noting that, according to the capital market news on November 21, the central bank, the State Administration of Financial Supervision and the China Securities Regulatory Commission held a symposium on financial institutions on November 17, which included 18 national commercial banks, 5 national financial asset management companies, and 4 large ** companies. A number of real estate financial easing policies were mentioned at the meeting, among which the "three not less than" hard indicator requirements attracted market attention. It is reported that the "three are not less than", specifically: 1) the growth rate of real estate loans of each bank itself is not lower than the average growth rate of real estate loans in the banking industry;2) The growth rate of corporate loans to non-state-owned real estate enterprises shall not be lower than the growth rate of local real estate;3) The growth rate of individual mortgages for non-state-owned real estate enterprises shall not be lower than the mortgage growth rate of the Bank.
From the perspective of these three not less than, the "first not less than" is that the growth rate of credit to real estate enterprises by state-owned banks is not lower than that of its peers, aiming to create an atmosphere of competition in the industry, from passive lending to active loan seeking, and alleviate the lack of liquidity and credit problems of real estate enterprises. "The second is not less than" is aimed at the financing difficulties of non-state-owned real estate enterprises, which are the "core area" of current debt default, which will help resolve the debt risk of such real estate enterprises. The "third not less than" is to start from the demand side, ensure the sales collection expectations of non-state-owned real estate enterprises, and achieve continuous improvement in the operating conditions of non-state-owned real estate enterprises by enhancing the delivery of personal mortgage loans.
Different from the "16 Financial Measures" and "Three Arrows" policies that were successively introduced in November 2022 last year, the "three not less than" is a quantitative indicator regulatory requirement. In addition, according to market rumors, the "white list" of companies includes more than 50 state-owned and private real estate enterprises, and the coverage has also been expanded, and there are rumors that the insured real estate companies may be included.
Although up to now, the white list of 50 real estate companies has not been confirmed, but since the central bank, the State Administration of Financial Supervision, and the China Securities Regulatory Commission in November, many banks have actively organized symposiums with real estate companies, including Agricultural Bank of China, China Construction Bank, Bank of Communications, Industrial and Commercial Bank of China, Guangfa Bank, etc., among which Vanke, Longfor, Xincheng and other real estate companies have attended many times. Although the policy continues to be favorable, bringing easing expectations to the market, it remains to be seen how effective it will be.
The total amount of financing for the whole year decreased by 28% year-on-year, and the financing cost decreased structurally.
Judging from the total financing of 80 typical real estate companies over the years, there will be negative growth for the first time in 2021, with a total financing of 1,260.9 billion yuan, a year-on-year decrease of 24%. The downward trend in the scale of financing in 2022 is still expanding, with the total amount of new financing in 2022 being 826.2 billion yuan, only 66% of the total financing in 2021, a year-on-year decrease of 34%, and the total annual financing fell below 1,000 billion yuan for the first time since 2016. In 2023, the total amount of new financing will be 569.2 billion yuan, a year-on-year decrease of 28%, and the decline will slow down slightly.
From the perspective of financing in each quarter, there were different degrees of year-on-year declines in each quarter, of which the fourth quarter was 53% year-on-year, with a trend of acceleration. Although the policy has been relaxed since the fourth quarter of 2022, the financing opening is limited to high-quality real estate enterprises and white-listed real estate enterprises, and the overall industry financing is still in the bottoming stage, and the financing difficulties of most private real estate enterprises, especially those that are out of insurance, are still prominent.
From the perspective of corporate bond issuance, the amount of corporate bonds issued in 2023 will be 305.6 billion yuan, a year-on-year decrease of 31%. Among them, the domestic bond issuance was 296.3 billion yuan, a year-on-year decrease of 15%;Overseas bond issuance fell sharply by 90% to 9.3 billion yuan over the same period, accounting for 18 percentage points to 3% year-on-year.
The financing cost of offshore bonds is as high as 822%, up 1. from the full year of 202222 percentage points, mainly due to the cost of overseas bonds issued by Wanda as high as 11% during the period, in addition to the interest rate issued by Ganglong China in November 95% senior notes;Domestic bond financing costs345%, down 009 percentage points, mainly due to the fact that most of the bond issuers are state-owned enterprises, central enterprises and high-quality private enterprises, and the financing advantages of such enterprises are more obvious. Due to the increasing proportion of domestic bond issuance, the overall financing cost of bond issuance showed a downward trend. In 2023, the overall new financing cost of bonds will be 360%, down 062 percentage points.
The scale of bond issuance by private real estate enterprises fell by 72%, and industry differentiation continued to intensify (some omitted).
From the perspective of the nature classification of enterprises, the bond issuance volume of state-owned enterprises and central enterprises in 2023 will be 250.2 billion yuan, a year-on-year decrease of 6%, and the bond issuance volume of private enterprises will be 36.8 billion yuan, a sharp decrease of 71% year-on-year, so that the total bond issuance of state-owned enterprises and central enterprises will continue to account for 60% compared with 2022 pct to 82%, mainly due to the fact that state-owned enterprises and central enterprises have always been financially stable, and at the same time have natural credit background advantages, which are less affected by financing policies.
It is worth noting that most of the bond-issuing real estate companies in 2023 are "old faces", and the current financing opening is limited to some real estate companies. More than half of the bonds issued by China's state-owned enterprises and central enterprises have issued bonds, including Xiamen International Trade Center, China Merchants Shekou and Financial Street, all of which have reached the level of 10 billion yuanIn addition, 14 private enterprises have issued new bonds, of which only Midea Real Estate, Longfor Group, Binjiang Group, Xincheng Holdings, Excellence Group, Jinhui Group, China SCE Group Holdings, and New Hope Real Estate 8 companies still have new bonds issued in the second half of the year. For example, in April 2023, the registration and issuance of 5 billion medium notes of Excellence Group was approved, the first phase of 1 billion yuan was issued in September, 500 million yuan was issued again in November, and there will be a quota of 3.5 billion yuan in the future. Since 2022, Excellence Group has issued four tranches of medium-term notes totaling RMB2.5 billion.
The proportion of domestic debt financing increased to 79%, and domestic bond issuance rose first and then fell and continued to be weak (slightly).
Equity financing increased by 56% year-on-year throughout the year, and some real estate companies encountered obstacles (omitted) in their low-price issuance
Public REITs are expanded to consumer infrastructure, and various preparations must still be made before issuance (omitted).
A number of domestic and foreign debt restructuring of real estate enterprises have been completed, and debt-to-equity swaps have been adopted as the mainstream plan (omitted).
Prospect. In the first half of 2024, debt maturity pressure will remain high.
Real estate companies need to seize the recent favorable policy window.
Although the current financing policy continues to be favorable, the actual income is still limited to high-quality real estate enterprises and white-listed real estate enterprises, and the overall financing of the industry is still weak. Especially for most private enterprises, overseas financing is still in the frozen period, and domestic bank credit and bond credit enhancement are basically still biased towards supporting high-quality real estate enterprises with relatively good financial conditionsAlthough equity financing is available to most private enterprises, and the enthusiasm for equity allotment financing of real estate enterprises has been relatively high since December 2022, this financing method is not sustainable and is affected by stock price fluctuations. It can be seen that in the context of the current industry risks have not been fully cleared and market confidence has not been fully restored, the problem of difficult and expensive financing for most private real estate enterprises still needs to be solved.
From the perspective of debt maturity, the total maturity scale of real estate enterprise bonds in 2023 will be 696.8 billion yuan, while the issuance scale will only be 292.7 billion yuan, which is 138% higher than the issuance scale, which also means that real estate companies cannot cover the maturity of old debts by issuing new bonds. It is worth noting that in 2024.
The first and second quarters are still the peak of maturity, with a maturity scale of more than 150 billion, and the debt pressure of real estate companies in the first half of next year is still large.
Since the symposium of financial institutions of the central bank, the State Administration of Financial Supervision and the China Securities Regulatory Commission in November, a number of banks have held intensive forums for real estate enterprises, focusing on supporting the financing needs of real estate enterprises under different ownership systems without discrimination, among which Vanke, Longfor, Xincheng and other real estate companies have attended many times. Although the warm wind has been blowing frequently recently, the easing of financing policies still needs to be implemented in order to form strong support for real estate enterprises.
It should be noted that in December, a number of real estate companies issued corporate bonds or medium-term notes, such as December 12, China Overseas issued 3 billion interest rate 32% corporate bonds;On the 18th, Longfor also issued 1.2 billion medium-term notes guaranteed by China Debt Increase, including Shoukai, Huafa, China Merchants, etc. However, from the perspective of bond issuers, they are still dominated by white-listed real estate enterprises, and the scope of bond issuers has not been expanded in a practical sense.
In the current environment, it is still difficult for insuring real estate companies to obtain bank loans. This is mainly due to the fact that when banks handle loan collateral as collateral, they give priority to collateral with relatively stable value and strong liquidity, and generally do not accept collateral that is not easy to realize, difficult to go through registration procedures or fluctuates greatly. However, most of the insuring real estate enterprises can be used for mortgage loans with fewer targets, and it is still unlikely to obtain bank loans under the market-oriented mechanism.
For real estate companies that can still operate normally, the top priority is still to grasp the window period of the current favorable policies, adjust the marketing strategy of the enterprise, and accelerate the decentralization of the project. At the same time, it is also necessary to carry out structural adjustment of the land reserves of enterprises, especially to speed up the removal of stagnant inventories and the decentralization of low-level urban projects.
Real estate companies with diversified businesses can also accelerate the transformation process. For example, the Shanghai and Shenzhen Stock Exchanges have agreed to carry out ABS and REITs business on a pilot basis for 5 insurance companies, and the China Securities Regulatory Commission has expanded the asset types of public REITs to consumer infrastructure. Operators of real estate enterprises with high-quality real estate projects can accelerate the strategic transformation of their enterprises with the help of public REITs, and the asset operation mode has changed from heavy to light, and their role positioning has changed from developers to asset management service providers, which is of great significance for real estate enterprises to get out of the current industry predicament.
It's easy to enjoy the purchase information, come and pay attention to Leju.com].
Article**: Kerry