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To implement the decisions and plans of the CPC Central Committee and the State Council and promote the stable and healthy development of real estate market, SZSE recently organized and held a forum of market entities in the real estate industry. At the forum, SZSE looked into the effect of the real estate support policies, the business and capital operation statuses of real estate enterprises, and the challenges they were faced while listening to the opinions and advice of relevant real estate enterprises and intermediaries on how to better implement relevant policies. It’s a pragmatic measure of SZSE to actively communicate with the frontline of the market and make good use of surveys.
The real estate industry is a pillar industry of the Chinese national economy. Its stable and healthy development has an impact on the stability of the financial market and the general economic and social development. At the 2022 Central Economic Working Conference, General Secretary Xi Jinping stressed that we should ensure the stale development of the real estate market, and take solid steps to ensure timely delivery of pre-sold homes, ensure the people’s wellbeing and maintain stability; and that we should meet the industry’s reasonable financing needs, promote industrial M&A reconstructing, effectively forestall and defuse the risks faced by quality head real estate enterprises, and improve their asset and liability conditions. SZSE has firmly carried out the decisions and plans of the CPC Central Committee and the State Council and the guiding principles of the Central Economic Working Conference and earnestly put in place CSRC’s job arrangements. SZSE has included supporting the stable and healthy development of real estate market as a job priority and formulated specific measures to give better play to the direct financing function of the capital market. Those efforts have strongly supported the real estate enterprises’ reasonable financing needs and helped improve the balance sheets of quality real estate enterprises.
In terms of equity financing, since the five measures for equity financing were released in November 22, a total of nine real estate enterprises and four real estate related enterprises listed on the SZSE market disclosed their refinancing plans and M&A reconstructing plans, which are expected to raise a total of CNY 43.44 billion. In terms of bond financing, since 2022, SZSE has supported real estate enterprises’ issuing of a total of CNY 77.33-billion corporate bonds and CNY 98.286-billion asset-backed securities, which has met the real estate enterprises’ demands of incremental financing and continuing financing and expanded the use of raised funds by quality real estate enterprises. Besides, SZSE has implemented the new credit enhancement model for real estate enterprises in which the central government and the local government cooperate with each other. A total of eight relevant credit protection agreements or certificates have been reached, with a total of nominal principal of CNY 1.24 billion. Those credit protection agreements or certificates have helped raise more than CNY 3-billion financing for real estate enterprises. In terms of infrastructure REITs, SZSE has issued the guidelines on government-subsided rental housing REITs, launched the first relevant products on the market, and actively served the building of a housing system that has multiple housing suppliers, provides guarantee via various channels and encourages both housing rentals and purchases. In terms of risk resolution, SZSE has taken a combination of measures to support the quality real estate enterprises and bail out the real estate enterprises having risks while vigorously promoting the resolution of debt risks. Since 2022, a number of real estate enterprises have eased their debt pressure through market-based approaches such as bond renewal, put-back revocation, resale of put-back bonds, etc.
Heads of the real estate enterprises and intermediaries at the forum said that the real estate related support policies have played a positive role in promoting the healthy development of the industry and have truly boosted market confidence. Among the forum attendees, Vanke and CCCG Real Estate planned to raise CNY 15 billion and CNY 3.5 billion through refinancing respectively and use the funds to further adjust their asset-liability structures. Benefiting from the support policy for the first pilot projects of credit enhancement under the “central-local government cooperation model”, Country Garden successfully issued by bookkeeping its 2nd tranche of corporate bonds in 2022, further expanding its financing channels. China Merchants Shekou Industrial Park REIT was successfully listed, which effectively mobilized its existing assets. In terms of market performance, since the “first arrow” was shot, over sixty percent of the constituent stocks of the SWS Property Index have risen, and twenty percent of the real state constituent stocks have risen by over 10% in stock price over the past three months or so. In terms of business performance, nearly seventy percent of the SZSE-listed real estate enterprises disclosed their projected earnings of 2022. Fifteen companies forecast gains, and four said they were expecting a profit growth, one of which said its profit growth was expected to exceed 500%. One company completed transition and was expected to turn around and make a profit. Nine companies projected decreases in losses, an increase of seven companies year on year, showing that the implementation of real estate related policies has produced initial results.
The market entities at the forum exchanged experiences in equity financing, bond financing, company operation and risk resolution. They gave constructive opinions and suggestions on how to further optimize the refinancing and M&A reconstructing regulations, improve review efficiency, refine the bond financing mechanism for real estate enterprises, motivate investors to participate, and promote the development of the infrastructure REITs market.
A relevant official of SZSE said that promoting the stable and healthy development of the real estate market is a systematic project. SZSE will work together with market participants including local governments, administrations of the industry, state-owned assets supervision departments, market entities and intermediaries in this process. SZSE will closely follow the developments of real estate industry and give better play to the role as a market organizer and platform hub. We will do practical work, seek solid measures and strive for actual effect. We will encourage real estate enterprises to make good use of financing and M&A instruments, support real estate enterprises in their efforts of expanding the use of funds raised through issue of bonds, and issue fixed-income products such as the asset credit-backed CMBS, the immovable property backed ABS and the green bonds, to support the stable and healthy development of the real estate market and better serve the central government’s efforts to maintain stable macroeconomic performance.
