Acquisition financing of 100 billion yuan continues to make new efforts to take over zhenro Foshan project

2022-08-04 0 By

Liu Wei/From The United States of Beijing real estate, private real estate enterprise acquisition team added new Hope real estate.On March 27, Zhenrong Real Estate Group Co., LTD. (hereinafter referred to as “Zhenrong Real Estate”, 06158.HK) announced that it sold 51% stake in Zhenlong (Foshan) Real Estate Development Co., LTD. (hereinafter referred to as “Zhenlong Foshan”) to New Hope Real Estate for about RMB 156 million.Previously, On March 24, Shanghai Pudong Development Bank Chengdu Branch intended to grant 5 billion yuan of special m&a financing to New Hope Real Estate, which became the opportunity for the equity acquisition of this project.In addition to New Hope Real Estate, according to the reporter’s statistics, country Garden, Midea Real Estate and other real estate companies have obtained m&a financing quota from financial institutions since 2022, totaling hundreds of billions of yuan.Enterprise, since the second half of 2021, a wave of BaoLei have enterprise executives told reporters when questioned, the other side of the coin is that the industry situation, instead of to the part of the enterprise, “corner overtaking opportunities, because most of the companies are shrinking, inventory, some companies this time buck the trend, there is a chance in the comprehensive strength such as business volume to a higher level.However, in the CCTV financial commentator Xue Jianxiong, now the market is not good, expansion is not necessarily beneficial, he believes that the current acquisition risk is far greater than the opportunity, after all, land prices are not cheap, and construction materials labor costs are rising, but the housing price is not rising, can not be too optimistic about the industry prospects.On March 28, a reporter sent an outline of an interview with New Hope Real Estate regarding the company’s acquisition plans, but received no response as of press time.In a conference call for Zhenro real estate investors held on February 23, the company’s senior executives disclosed that the company had sorted out a number of cooperative projects and investment properties, and discussed the transfer of project equity with existing partners and state-owned enterprises.It is estimated that in the first half of 2022, Zhenro Real Estate can complete the disposal of assets of 3 billion to 4 billion yuan.The equity transfer of the project with New Hope real estate is the implementation of zhenro’s previous asset disposal plan.According to the announcement, on March 25, 2022, an indirect subsidiary of Zhenro Real Estate, a wholly-owned subsidiary of New Hope Real Estate, and Zhenro Foshan entered into an agreement with Zhenro Guangzhou and Hefan Guangzhou, in which Zhenro Real Estate sold 51% equity of Zhenro Foshan to New Hope Real Estate.Zhenlong Foshan, a joint venture between Zhenro, New Hope and Hefan Guangzhou, is mainly engaged in property development in China and is 51 per cent owned by Zhenro and 49 per cent owned by New Hope.It is reported that Zhenglong Foshan holds the land use right of caochang Neighborhood Committee lot in Lishui Town, Nanhai District, Foshan city, Guangdong Province, which covers a total area of about 32,937 square meters and is planned for residential and retail purposes.The land, which was jointly developed by Zhenro Real Estate and New Hope Real Estate in late 2019, has a total value of about $2.6 billion.As of now, the project has been largely completed, all the buildings have been capped, and about two-thirds of the saleable properties have been sold.Upon completion of the sale, Zhenro Property will no longer hold any interest in the Target Company and the Target Company will no longer be recorded as a subsidiary of the Group.Two thirds of the saleable properties of the project have already been sold. Why is Zhenro eager to sell all its shares to the partner at this time?On the one hand, as of now, Zhenro Real Estate has 14 outstanding overseas bonds with an outstanding balance of about 3.599 billion US dollars, among which 5 overseas bills due in 2022 have been asked to be extended for one year, making it difficult to solve its own debt problem.On the other hand, the performance of Foshan’s real estate market is also an important factor.According to data from Hefu Research Institute and Foshan Real Estate Information Network, the amount of online registration in January 2022 was 771,900 square meters, down 33% year on year, while the amount of online registration in February was 428,600 square meters, down 31.69% year on year.Foshan property market overall transaction at a low level, also increased the difficulty of zhenro in the project.The board of Directors of Zhenro Real Estate believes that divestment from Zhenlong Foshan enables the Group to concentrate its resources on its existing business and is in the interests of the Company and its shareholders;The sale also increases the Group’s cash resources to meet its financial commitments and the Group currently intends to use the proceeds of the sale to repay existing debt.As the other side of the transaction, New Hope Real Estate is in a completely different situation from Zhenro Real Estate.According to the data monitoring by Kreirui, in 2021, New Hope Real Estate completed full-caliber sales of 105.91 billion yuan, ranking 39th in China, and equity sales of 53.01 billion yuan, ranking 49th.According to the 2021 semi-annual report, after excluding the advance receipt, the asset-liability ratio is 68.00%, the net debt ratio is 73.60%, and the cash-short debt ratio is 1.31, all of the “three red lines” remain green for three consecutive years.The semi-annual report also shows that the pre-sale price of New Hope Real Estate totaled 54.662 billion yuan, up 16.32% year on year.By the end of the period, the total assets of New Hope Real Estate amounted to 161.39 billion yuan, an increase of 12.26% compared with the beginning of the year, and advance payments accounted for 31% of the total assets.The company’s interest-bearing liabilities totaled 35.924 billion yuan, accounting for 28.23%, down 4.58% year-on-year.Interest-bearing liabilities due within one year accounted for about 20%, maintaining a sound capital structure.To promote the benign cycle and the healthy development of real estate industry, in December 2021, the central bank, bank insurance regulatory commission jointly issued “about focus on mergers and acquisitions of real estate enterprise risk management project notice of financial services, encourage high quality enterprises increase the merger and acquisition of real estate project in accordance with the principle of market-oriented, encourage financial institutions to provide mergers and acquisitions of financial services,Create a good financing environment for housing and enterprise mergers and acquisitions.On March 24, Shanghai Pudong Development Bank Chengdu Branch intended to grant 5 billion yuan of special m&a financing to New Hope Real Estate, including but not limited to m&a loan, M&A fund, asset securitization and other innovative financing business types.As of March 23, China Merchants Bank granted China Resources Land 20 billion yuan of financing, China Merchants Bank granted Country Garden 15 billion yuan of financing, and China Construction Bank granted Midea Land 22 billion yuan.In over 150 billion yuan of financing for real estate mergers and acquisitions, real estate enterprises directly issued bonds accounting for 4.6%, and banks granted m&a loans to real estate enterprises accounted for 66%. Real estate enterprises obtained 70% of the total financing line, among which private enterprises obtained 41.6% of the total financing line.In addition, 29.4 percent of financial institutions’ m&a bonds were financed.Megacities, capital university of economics and economic and social development research institute, the Beijing real estate law, vice President and secretary general Zhao Xiuchi believes that since 2022, many enterprises capital bottleneck, the management difficulty, need to merger and reorganization to out of the woods, this is the background of m&a financing active class, but this kind of financing can really play a role,Also consider the risk of merger and acquisition and the sustainable development ability of the project itself.Beautiful home buyers held on March 28, 2021 annual performance, the company chairman, executive director and CEO Hao Hengle revealed that “in the fourth quarter of last year to now, the beautiful home buyers have to acquire the equity of 13 projects, a total investment of $17, but due to revitalize the stock of capital and with the aid of m&a loan, group takes money only $4.”Hao Hengle also said that according to the strategy, the company will promote the acquisition and replacement of partner projects in the future, and improve the proportion of self-trading.The above real estate company executives believe that mergers and acquisitions will definitely occur in 2022, but even though many real estate companies have obtained m&a financing, it is not certain whether the mergers and acquisitions among real estate companies will become a trend this year.”Because at present, most private enterprises are under pressure in the capital chain and have no time to spare.”State-owned and central enterprises must be picky in the market and take the opportunity to lower prices when negotiating projects. It is a question whether their offer can cover the mortgage loans of the projects.”