Greenland has stepped on the three red lines and is under great pressure. At the key node of its performance at the end of the year, the sale of commercial properties can quickly recover the funds. According to Chen Xiao, an analyst at Zhuge housing data research center, based on the large amount of capital precipitation brought by commercial property, the sale of these assets can also quickly revitalize the capital.
In the past year, behind a series of disturbances, such as the suspension of high-rise buildings, the upsurge of rights protection, the peach colored news, and the arrears of payment and wages, there are many tests brought by the trillions of debts accumulated by Greenland. How should green land pass the red zone?
The green space on the shelf promotion project, there are many subway cover complex, with the advantages of the citys mature business district properties. Among them, Qingpu Green Space Center, Greenland guochuang building, Suzhou Greenland center and other seven projects have not yet been completed. The earliest delivery time is one year later, and the latest is five years later.
In terms of the location of these assets, there are some high-quality projects, but the large volume and high price also make it difficult to sell these properties. Under the pressure of the current three red lines , enterprises will be more cautious in taking over these projects and do not rule out the possibility of selling them at a discount. Chen Xiao told the unrivalled financial researcher that if it can be sold successfully, it can not only increase the cash flow of Greenland, but also help the sprint performance.
Compared with other projects, the contribution of Greenfield is different. According to the data, in 2019, the proportion of residential and commercial sales of Greenlands main real estate contracts is 65% and 35% respectively. By the first half of this year, the proportion of commercial office sales decreased to 30%, but still higher than other leading real estate enterprises.
This has something to do with the way green land is taken. Relying on the background of state-owned assets, Greenland can obtain a large number of low-cost land through cooperation with the government. However, the land projects cooperated with the government often include residential, commercial, office and other formats. This land acquisition mode makes the proportion of commercial office in green land storage relatively high. In the past five years, the proportion of commercial office sales area of green land has stabilized at about 25%.
According to the statistics of viewpoint real estate, the proportion of newly added commercial projects in Greenland is about 20% every year; in addition to pure residential projects, the proportion of commercial and residential projects is basically more than 50% of land acquisition in a single month except for pure residential projects. Judging from the seven newly added projects in October this year, there is only one pure residential land project, and the rest projects include commercial land.
It can be seen that commercial assets still account for a large proportion in the project layout of green space. However, housing can be recovered through rapid development and sales, but large-scale and slow-moving commercial projects are easy to become resistance to its performance growth.
In recent years, the sales of commercial offices are under great pressure. According to the data of the National Bureau of statistics, in 2019, the sales volume of office buildings in China will drop by 15.1%, and the sales area will drop by 14.7%; the sales volume of commercial business buildings will drop by 16.5%, and the sales area will drop by 15.0%.
Combined with the impact of the epidemic, investors enthusiasm for investment in office buildings and commercial real estate is also declining. According to Dai Deliangs 2020 China commercial real estate investment intention report, more than 60% of the interviewed commercial real estate investors believe that the investment scale of office buildings, retail (shopping centers and commercial streets) and hotels will decline; except for Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou, other cities are basically not considered by large investment institutions.
In the first half of this year, the sales volume of Greenlands commercial offices has decreased by 33.56% over the same period of last year, with a drop of more than one third. Under the downward pressure of the economic situation and the impact of the epidemic situation, commercial property brings a lot of capital precipitation, which will further drag down the performance of Greenland. Chen Xiao said to a non crown financial researcher.
Take Suzhou Green Center project as an example. The project, 358m high, was officially launched in September 2013, with a total area of nearly 700 Mu and a total investment of nearly 12 billion yuan. After six years, the project was officially capped in December 2019. At present, the outer frame steel structure is up to 78 floors, which has not been completed yet.
People in the industry generally believe that when a certain critical point is reached, the higher the floor, the more costs will be added: the cost of a 300 meter skyscraper will cost 3.5 billion yuan; if it is increased to 400 meters, it will cost 2.5 billion yuan more; if it is increased by 100 meters, the cost will become 3 billion yuan. According to this standard, the construction cost of Suzhou Green Space Center is about 6 billion.
Red zone is hard to escape
Its not just this huge asset sale that puts Greenland on the cusp.
In June this year, private fund products of Shenzhen Qianhai Tianji Wealth Management Co., Ltd. (hereinafter referred to as Tianji wealth) exploded, including phase I of Tianji Greenland central square private investment fund with a scale of 200 million yuan and a term of 12 months. The investment target is Greenland GIC Chengdu Central Plaza.
Prior to that, at the end of 2018, Greenland GIC project company signed an agreement with Tianji fortune. Tianji fortune would subscribe for 735 units of apartment T2 of Greenland GIC project through financing underwriting mode. The exclusive sale mode is that Tianji wealth pays a part of the deposit and takes Qingshui apartment at the unit price of 14000 yuan; Tianji wealth sells the apartment with 22000 yuan per square meter after hardcover. The price difference in the middle is the investors income protection.
But their cooperation ended in failure. According to one real estate, the reason for the failure of the cooperation between Greenland and Tianji fortune lies in the shutdown of Greenland GIC project, and the reason for the shutdown is that Greenland has defaulted on the project payment, so the goal of realizing rapid de industrialization through the exclusive sales mode has been defeated.
In October before that, Greenland southwest business unit was also publicly collected due to the arrears of 70000 yuan in advertising funds. From high-rise building stoppage, peach colored news, to arrears of payment and asset sale, all kinds of disturbances directly point to the capital pressure of Greenland.
As of the third quarter of this year, the net cash flow from operating activities of Greenland decreased by 45.17% to 5.004 billion yuan on a year-on-year basis; in terms of interest bearing liabilities, short-term loans and long-term loans were 29.947 billion yuan and 180.676 billion yuan, respectively, with a year-on-year increase of 12.4% and 19.05%.
Greenland is facing the current situation of the decline in sales amount, of which the commercial property accounts for a large proportion, while the commercial property itself is slow to collect money, which brings a drag on the sales performance of Greenland. At the same time, although the pace of green land acquisition has slowed down, it is still at a high level As for the sources of the pressure on Greenfields cash flow and liabilities, Chen Xiao told the unconcealed financial researcher.
On the land investment side, in the third quarter of this year, Greenland spent 36.5 billion yuan on 18 projects, which was the total amount of land acquisition in the first half of this year, and nearly twice the amount of land taken in the same period last year. In the first three quarters, it spent 73.1 billion yuan to acquire 77 projects, with a new value of nearly 280 billion yuan.
At the same time, Greenland is also constantly improving the scale of its second major infrastructure business. In the third quarter of this year, the total amount of capital construction projects and professional projects increased by 115% and 374% respectively. However, according to the semi annual report data, the revenue of green infrastructure business decreased by 16% compared with the same period last year. Because of its low gross profit margin, the companys overall profitability has been hindered to a certain extent.
In terms of sales payment, although it has been accelerated, it is still unsatisfactory. From July to September, the contracted sales area and sales amount increased by 15.8% and 26.9% respectively year-on-year. However, in the first nine months, the total contract sales amount was 217.88 billion yuan and the sales area was 17.604 million square meters, which decreased by 7.1% and 16.8% respectively year-on-year. Compared with the target of 400 billion yuan set by Zhang Yuliang at the beginning of this year, the sales volume is still 182.12 billion yuan, and the target completion rate is only 54.47%.
Under the weak sales and investment, Greenland is still stepping on the three red lines, and the indicators are in the high position of the industry. As of September 30, 2020, the net debt ratio of Greenland is 183%, which is 27 percentage points higher than that at the end of 2019; the asset liability ratio after excluding advance payment is 82.4%; the cash short debt ratio is 0.69, which is slightly higher than 0.65 in the middle of this year, but it is still far away from the safety zone of more than 1.
According to the annual report data, in recent years, the green space debt ratio has been maintained at a high level, which is 89.43%, 88.99%, 89.49% and 88.53% respectively from 2016 to 2019. Among the real estate enterprises with more than 100 billion revenue in 2019, Greenland is the only real estate enterprise with a net debt ratio of more than 100% for five consecutive years. By the end of 2019, the accumulated debt of Greenland has exceeded 1 trillion. In the same period, the debt balance of Shanghai municipal government was only 572.21 billion, which was nearly twice that of Shanghai municipal government.
Greenland itself has a little more super high projects and large market, and the development cycle is relatively long, so it is also relatively high dependence on debt, which makes it difficult to reduce the debt. Yan Yuejin, a well-known real estate analyst, told the non crown financial researcher that the follow-up Greenland should pay attention to the investment in residential projects. If the layout of residential projects is appropriate, then the cash flow will be relatively stable and the financial situation will be better controlled. In the face of high debt, Greenland frequently issues bonds. Greenland borrowed 500 million yuan and 190 million yuan from the shareholder company Greenland on September 15 and November 12, respectively, with annual interest rates of 6.5% and 5.7% respectively. On November 3 and November 11, Greenland Group also approved 18 billion yuan and 17 billion yuan of small public offering bonds respectively, which were used to repay eight bonds due at the end of this year and next year, totaling 34.998 billion yuan. According to news, Greenland Group also plans to issue up to 3 billion yuan of corporate bond financing in December. Source: interface news editor: Yang Zeyu_ NF6036
Greenland itself has a little more super high projects and large market, and the development cycle is relatively long, so it is also relatively high dependence on debt, which makes it difficult to reduce the debt. Yan Yuejin, a well-known real estate analyst, told the non crown financial researcher that the follow-up Greenland should pay attention to the investment in residential projects. If the layout of residential projects is appropriate, then the cash flow will be relatively stable and the financial situation will be better controlled.
Greenland borrowed 500 million yuan and 190 million yuan from the shareholder company Greenland on September 15 and November 12, respectively, with annual interest rates of 6.5% and 5.7% respectively. On November 3 and November 11, Greenland Group also approved 18 billion yuan and 17 billion yuan of small public offering bonds respectively, which were used to repay eight bonds due at the end of this year and next year, totaling 34.998 billion yuan. According to news, Greenland Group also plans to issue up to 3 billion yuan of corporate bond financing in December.