has written an article before, "Investors read, the best solution for real estate trusts after the "burst"". This article describes the solution after facing real estate defaults, the solution is "take over + infrastructure". The general meaning is to rebalance the interests between AMC + trust + real estate companies, build the project, ensure the payment and guarantee the payment.
Recently, after multiple policies supported the real estate industry, AMC, like White Horse Knight, finally appeared. This time, with a consortium composed of 6 banks and a trust company, finally took action against Sunac.
On December 1, China Huarong, six banks, Pudong Development Bank, CITIC Trust and Sunac China (01918.HK) completed the share transfer transaction on the financing cooperation of Shanghai Dongjiadu project.
Real estate: well-known real estate company Sunac, trust: CITIC Trust, AMC institution: China Huarong, the four major asset management companies in .
The six banks of the bank are: Pudong Development Bank, Shanghai Bank, Shanghai Rural Commercial Bank , Bank of Communications, Industrial Bank , and Beijing Bank .
This is a group rescue of financial institutions for the real estate industry. The lineup is really luxurious and belongs to the flagship configuration of the financial industry.
Let’s talk about Sunac first. As a well-known real estate company in China, it belongs to the top real estate companies in China. It has strong enough strength and has a lot of high-quality assets. The company’s crisis is due to the recurring epidemic and the sluggish real estate market. This kind of real estate company has good assets and great strength. It can survive as long as it loses blood. It is the main target of national policies to support and rescue.
Let’s talk about CITIC Trust, as the number one in the trust industry, has caused the industry’s reputation to decline due to business compression. However, its overall strength cannot be underestimated and is also the top star in trust industry .
China Huarong, one of the four major AMCs, is known as a financial vulture because of its deep background and wide resources.
6 banks of the syndicate, including state-owned banks, joint-stock banks, local banks, and local rural commercial banks, basically representing China's existing banking structure.
According to people familiar with the matter, the equity transfer of this cooperation is not a project sale, but an equity financing cooperation between Huarong Assets and Sunac Dongjiadu project. equity is designed as a trust income right method. Huarong joins the syndicate and trust institutions to conduct large-scale financing of the project. Sunac is also the operator. Huarong exercises regulatory functions and retains the use of the Sunac brand. Sunac will repurchase equity after the future financing is repaid. On exit, AMC (asset management company) and the bank have priority in financing, and Sunac shares are inferior and repurchases the shares after the financing is fully repaid.
RongC’s practical operation this time is not exactly the same as what he imagined. This equity transfer is not directly taken over by AMC and Trust to carry out the construction of the project, but by injecting capital, Sunac will continue to build. AMC and Trust only supervise one capital, and the real estate in the future is still allowed to be named.
We can think about why this is done? In fact, the logic behind it is not complicated. AMC, banks and trusts are not good at real estate development. If you do it yourself, you will not do it well. It is better to leave it to a professional real estate company. Just manage the funds yourself and ensure that Sunac does not remove the funds.
continues to be named by Sunac because the goodwill of Sunac Real Estate is still there, which is also beneficial to the preservation of the house's sales and value . As Sunac, it is also a good thing. Although the equity in the early stage has been sold, the operation rights of the property are still in hand. It will not change the design and development concept of your own property due to external funds, and will not affect your brand value. The most important thing is the injection of funds, which can better supplement the liquidity of the company and help the group company recover as a whole.
The rebalancing point of interests is that Sunac uses the project's income rights to allocate, and AMC, syndicates, and trust companies enjoy the right to prioritize the distribution of income. After Sunac's inferiority, inferiority is similar to the margin system. When others make money, others get the profit first, and when they lose money, they bear it first.
Some people may think that this model seems unfair to Sunac, but on the contrary, this is the greatest fairness and decency given to Sunac by AMC, syndicates, and trust companies. Sunac will no longer be criticized by the property and will be criticized by home buyers. It can continue to maintain its brand value.
Trust companies can unpack the trap due to the intervention of AMC and bank consortiums, and there will be funds to be redeemed to investors. Even if this part of the funds is provided, the trust itself will first give it to investors, because the money will still reach its own account in the future. Doing so will not only protect its own credit, but also get a share of the profit rights of Sunac. This wave of
AMC and bank consortiums have basically made steady profits. They have obtained equity in the past and combined with their own strong resources and financial advantages to quickly promote the completion and monetization of the project. The investment of resources and funds is short and fast, with extremely low risks, but the profit of is objective. The takeover + infrastructure model of
AMC, trusts, and real estate companies has been successfully implemented, providing templates and experience for real estate defaults.
AMC and the syndicated low prices to buy the bottom to save real estate, which is also a good feasible solution for society, industry, investors, and owners.
Follow us and consult the author if you have any trust-related questions.
