China’s developer dominoes are looking wobbly this week
China’s ongoing credit crunch dominates the real estate news today as developer Sinic Holdings Group has become the latest mainland builder to default on offshore bonds.
The debt contagion may have also spread to Shanghai-based Shimao Group, which sent its property services to market in search of some emergency cash and Evergrande says that it has now halted talks on a potential sale of its services unit to Hopson Development.
Chinese Developer Sinic Defaults on Offshore Bonds
Sinic Holdings Group has become the latest Chinese real estate firm to default as investors wait to see whether China Evergrande Group will meet overdue interest payments on dollar bonds this week.
Sinic’s credit rating was lowered by S&P Global Ratings to “selective default” from “CC” after the company failed to repay the interest and principal of its US$250 million (S$336 million) note due on Monday (Oct 18), according to a statement dated Tuesday. Read more>>
Kaisa Group Bonds Fall After Canceling Investor Meetings This Week
Chinese property firm Kaisa Group Holding fell further in a volatile credit market after it earlier canceled meetings with some investors that had been scheduled to take place this week.
The company, which grabbed headlines in 2015 when it became the first developer from China to default on U.S. currency bonds, told the investors earlier this week that meetings were canceled due to a scheduling conflict, people familiar with the matter said. The meetings were to have been at an Asian credit conference organized by Bank of America. Read more>>
Shimao Services Taps Jittery Capital Market in Surprise Plea for Funds
Shimao Services Holdings, the management unit of one of China’s largest property developers, is tapping the capital market for funds, a plan that surprised investors who are already jittery over the financial state of China’s indebted developers, causing its shares to tumble.
Shimao plans to issue HK$3.11 billion of convertible bonds at a conversion price of HK$18.22 per share, and sell 115 million shares at HK$15.18 to raise a combined HK$4.86 billion (US$624 million), according to two filings to the Hong Kong stock exchange on Wednesday. Read more>>
Evergrande Halts Talks on Stake Sale
China Evergrande (3333) has suspended negotiations to sell a 51 percent stake in its property management unit Evergrande Property Services (6666) to Hopson Development (0754) as the indebted developer did not win the nod from the Guangdong government, REDD reported.
Meanwhile, Shimao Services (0873) plans to raise HK$1.7 billion through a share placement, offering the lowest price at HK$15.18 apiece, a 9.75 percent discount to the previous closing price, local media reported. The company’s subsidiary will also issue a guaranteed convertible bond with a total price of HK$3.11 billion due in 2022. Read more>>
China Home Price Index Falls for First Time in 6 Years
China’s monthly benchmark price index of new homes fell for the first time in more than six years, confirming the real estate slump that dragged the nation’s economy to its slowest quarterly growth pace since September 2020.
The average cost of a new home in China fell by 0.1 per cent in September from last year, according to the price data of 70 major cities tracked by the National Bureau of Statistics (NBS) released on Wednesday. The monthly decline was the first since May 2015, in contrast to the 0.2 per cent increase in August Read more>>
PGIM Adds Another Office Tower on Brisbane’s Queen Street
PGIM Real Estate has confirmed the purchase of 444 Queen Street in Brisbane for $54.4 million from sellers Abacus Property Group and The Public Trustee of Queensland, adding to its growing presence on the street.
The 22-storey, 13,967-square-meter office skyscraper, located in the sought-after ‘Golden Triangle’, is on a 1708-square-meter lot with 31 metres of frontage on Queen Street and 72 parking spots. Read more>>
Ascendas Reit Posts 3.7% Rental Reversion in Q3
Ascendas real estate investment trust (Reit) posted a positive rental reversion of 3.7 per cent for lease renewals in Q3 ended September, down from 8.9 per cent in Q2, it announced in a quarterly business update on Tuesday.
It expects rental reversion for FY2021 to be in the “positive low-single-digit range”, given market uncertainties. In the year to date, rental reversion stands at 5.4 per cent. Read more>>
Seoul Is Losing Hotels Big and Small Amid Protracted Pandemic Crisis
Hotels across South Korea are going out of business, from luxury to budget category, surrendering the locations to residential and office buildings as they no longer can withstand the tourism hiatus from pandemic.
Hotel transactions in the first half of this year totaled 846.8 billion won ($715.7 million), already nearing last year’s annual worth of 942.4 billion won, according to the country’s leading real estate asset manager IGIS Asset Management Co. Industry watchers forecast that the transaction volume would reach 1.2 to 1.3 trillion won by the end of this year. Read more>>
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