Since 2019, with the fluctuations within the real estate market and policy adjustments, the financing environment of real estate companies has been ups and downs like a "roller coaster". According to statistics from Tongce Research Institute, after the sharp decline in real estate financing in August, real estate financing rebounded significantly in September.
However, Blue Whale Real Estate found that due to the differences in the conditions of real estate companies, the financing capabilities also showed obvious differentiation. At the same time, in the face of the continuous increase in financing costs, diversified innovative financing methods have emerged. Companies including Shoukai Co., Ltd. (SH: 600376) and Sunshine City (SZ: 000671) have adopted new financing channels to "find money".
9 financing amount rebounded cyclically
After experiencing the "small trough" of financing in August, real estate companies ushered in a rapid rebound in financing in September.
According to statistics from Tongce Research Institute, in September, the amount of financing of 40 typical real estate companies was 68.956 billion yuan, an increase of 87.25% month-on-month. However, according to Blue Whale Real Estate Observation, since the total financing amount of real estate companies in August was the second lowest point of the total financing amount of real estate companies this year, even though the financing amount rebounded sharply in September, it was still at a moderate level.
Regarding the reasons for the rebound in real estate financing in September, Zhang Hongwei, director of Tongce Research Institute, pointed out that after the China Banking and Insurance Regulatory Commission issued Document No. 23 in May to rectify the chaos in real estate financing, in July and August, regulatory authorities intensively issued a number of tightening policies and strictly controlling the financing channels for real estate companies, resulting in a sharp decline in financing for real estate companies in August. There may be some releases in the previous area approvals until September.
But this does not mean the relaxation of the current financing environment in the real estate market. On September 6, the central bank announced that it would comprehensively lower the reserve requirement ratio of financial institutions by 0.5 percentage points on September 16. Then, on September 11, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, once again emphasized that it is necessary to strictly curb the tendency of real estate financialization and bubble. gr. Rerui Research Center pointed out that although there are no new policies to restrict financing for real estate companies, the financing environment of real estate companies is expected to continue to remain tighter and operate at a low level for a period of time. The changing trend of
can also be seen from the quarterly financing scale of real estate companies. According to data from Tongce Research Institute, in the third quarter of 2019, the financing amount of 40 typical real estate companies was 193.773 billion yuan, which rebounded compared with 173.321 billion yuan in the second quarter, up 11.8% month-on-month. But it is still far from the first quarter of 245.809 billion yuan. Zhang Hongwei pointed out that since May, under the influence of policy supervision, the financing trend of real estate companies has shown a downward trend.
financing interest rate continues to rise
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It is worth noting that as the real estate financing environment continues to tighten, its financing costs are also rising. Data from
gRire Research Center pointed out that as of September 2019, the new bond financing cost of real estate companies was 7.03%, an increase of 0.50 percentage points from the whole year of 2018. Among them, the cost of overseas bond financing reached 8.08%, an increase of 0.86 percentage points from the full year of 2018. In this regard, Lu Wenxi, a market analyst at Shanghai Zhongyuan Real Estate, told Blue Whale Real Estate that due to the transparent market environment, the ceiling of real estate sales prices has not been relaxed against the backdrop of rising financing costs, which will also swallow up corporate profits to a certain extent. But he also pointed out that in the current market environment, whether it is cost-effective or financing amount, it is enough to obtain support from the capital market, which is enough to prove the development potential of the enterprise.
From the perspective of financing costs, the gap between real estate companies is already very obvious.
Among the disclosed data, the lowest financing cost in September was Vanke (SZ: 00002) publicly issued special housing rental corporate bonds (second phase) to qualified investors in 2019, with an issuance scale of 2.5 billion yuan and a financing cost of 3.55%; followed by the US$850 million 10-year investment-grade priority notes issued by Longfor (HK: 00690), with a coupon interest of 3.95%. It is worth noting that the not reached a new low for coupons for 10-year US dollar bonds of private enterprises in the past two years. The highest financing cost is the US$110 million overseas public bonds issued by Hongkun Real Estate. It is understood that the issuance period of the bond is 3 years and the face interest rate is 14.75%; followed by the US$220 million public notes issued by Zhengshang Real Estate, with an annual face interest rate of 12.8%.
Regarding the differences in financing interest rates among real estate companies, Zhang Bo, chief analyst of 58 Anjuke, pointed out to Blue Whale Real Estate that the difference in financing interest rates has actually been very common in the past two years. Generally speaking, large central enterprises or large private real estate companies with stable financial structures are more likely to obtain low-interest financing, while real estate companies with excessive debt levels or small scales often do not have an advantage in the financing level. Of course, in the context of overall tight real estate financing this year, real estate companies with higher desire for funds tend to be more likely to have higher financing interest rates.
Take Hongkun as an example. According to its semi-annual report data, as of the end of June 2019, Hongkun Real Estate's total liabilities reached 47.929 billion yuan. Among them, the total current liabilities reached 38.074 billion yuan, the balance of cash and cash equivalents at the end of the period was 3.39 billion yuan, and the quick ratio was 0.44. According to the summary of Blue Whale Real Estate, in recent years, Hongkun Real Estate's debt-to-asset ratio has been on the rise. From 2016 to the first half of 2019, its debt-to-asset ratios were 78.39%, 79.12%, 79.38% and 79.02% respectively.
and Taihe Group is deeply in a liquidity crisis. Since the beginning of this year, not only has the project reimbursement frequently, but the interest rates of its issuance of US dollar bonds are also higher than 10%, far higher than last year's average.
In fact, according to statistics from Tongce Research Institute, since this year, the US dollar financing cost of many real estate companies such as Contemporary Real Estate (HK: 01107), Taihe, Rongxin China (HK: 03301), Zhongnan Construction (SZ: 000961), China Evergrande (HK: 03333) and other real estate companies have exceeded 10%, and overseas debt financing with more than 10% is no longer an isolated case in the industry.
Shoukai Shares , Sunshine City explores new financing situations
"Although the financing amount of real estate companies rebounded in September, real estate companies are still facing the dilemma of difficult financing. Real estate companies adopt diversified innovative financing methods to broaden financing channels." Chen Mengmeng, analyses of Tongce Research Institute, pointed out.
On April 19 this year, the Political Bureau of the Central Committee reiterated the position of "housing for living, not for speculation", which is generally considered a sign of tightening real estate credit; in May, the Ministry of Housing and Urban-Rural Development listed the phenomenon of real estate companies using banks and trust funds to illegally use land acquisition and other phenomena in the scope of rectification; the National Development and Reform Commission issued the "Notice on the Registration and Registration of the Application for the Issuance of Foreign Debts in Real Estate Enterprises", which restricted the issuance of bonds by real estate companies, requiring real estate companies to "can only be used to replace medium- and long-term overseas debts that mature within the next year." Before and after this, the China Banking and Insurance Regulatory Commission further strengthened the monitoring of real estate trust funds.
In the face of the comprehensive tightening of the domestic and foreign financing environment, in order to obtain more funds, major real estate companies have to adopt diversified and innovative financing methods.
htmlOn September 27, Shoukai Co., Ltd. issued an announcement stating that its subsidiary Shoukai Zhonggeng Investment intends to apply for a bond insurance plan of 800 million yuan from Life Insurance Asset Management Co., Ltd., with a term of 2 years. Fully guaranteed by Shoukai Co., Ltd. . It is understood that the bond insurance plan belongs to a type of financing form of non-standard debt rights of real estate companies (non-standard debt rights also include trusts, private equity and traffic management plans, etc.). The initiator is an insurance asset management company. By issuing investment plan beneficiary certificates, it raises funds from insurance companies and other principals. Generally speaking, the bond insurance plan has the advantages of long term and low cost.Can this form of financing be applicable to all enterprises? Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, pointed out to Blue Whale Real Estate that the application scope of the bond insurance plan is relatively narrow, mainly targeting enterprises and projects with stable returns, high credit ratings, and involving real estate and real estate finance, such as key infrastructure and large state-owned enterprises and affordable housing. Although this financing form has the advantages of flexible term, low cost, flexible supervision of capital use, does not occupy bank loan quotas and is not restricted by bank loan quotas, it has high requirements for the credit level of enterprises. Generally, it requires that the credit subject rating should be at least AA+ or above, and the credit enhancement conditions are strictly required. Therefore, it also limits the scope and application scope of the financial instrument of the bond guarantee plan.
Bai Wenxi bluntly stated that the first debt protection plan issued can be studied and learned for ordinary real estate companies, but it does not have extensive reference significance.
In addition to this, a entrusted loan passed by Sunshine City has also attracted much attention from the market.On September 6, Sunshine City provided a guarantee for its 100% equity subsidiary Changxing Wanyi Investment, which plans to accept a 24-month loan of 700 million yuan entrusted by Huarongrongde to Hengfeng Bank Beijing Branch. It is understood that as a guarantee condition, the land under the name of Sunshine City 's subsidiary Qidong Guangxun Real Estate needs to be mortgaged, and 100% of Qidong Guangxun Real Estate's equity is pledged. Tongce Research Institute pointed out that this entrusted loan is the first entrusted loan that occurred since its monitoring since January 2018.
Zhang Bo pointed out to Blue Whale Real Estate that entrusted loans have the characteristics of relatively flexible and wide application scope. This form is more common in the real estate financing field. Strictly speaking, it is still direct financing, and banks only play an intermediate role. Faced with the rare doubts in the market that this financing form of Blue Whale Real Estate has been rare in the market, Zhang Bo added that in recent years, the conditions for commercial banks to issue entrusted loans under national supervision have been quite strict. At the same time, since the loan risk is borne by the principal, it is difficult to find a suitable lender. The interest rate will generally be higher than the same period of financial institutions such as banks.
Bai Wenxi said that although entrusted loans are completely market-oriented, due to their particularity, the cash flow situation of real estate companies is required to be better than the bond guarantee plan and have a higher credit rating. The entrusted talents may lend their own funds to it in the form of entrusted loans. Real estate companies with tight cash flow and high financial risks are more difficult to obtain entrusted loans. At the same time, the credit gap between small real estate companies is very unlikely to obtain a commission loan at a low cost.
It is not difficult to see that whether it is mainstream financing or diversified financing methods, capital is flowing to enterprises with large scale, high ratings and high cash flow guarantee coefficient. As the differences in financing capabilities are reflected, the pattern between real estate companies may also face a new reshuffle. Next, Blue Whale Real Estate will continue to pay attention to how the market financing situation will evolve and how real estate companies will take to increase their funds.
Source: Blue Whale Finance
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