
R&F sold a logistics facility in Guangzhou to Blackstone last year as it ran short of cash
Distressed Chinese property developer Guangzhou R&F Properties announced its long-delayed 2021 audited financial results on Sunday, reporting a net loss of RMB 16.4 billion ($2.4 billion). That figure was nearly double the loss of RMB 8.7 billion which R&F had declared in unaudited results declared in March, with the company attributing the change to a write-down of inventory value.
R&F, which has long been one of China’s most aggressive borrowers, linked the disappointing results to a variety of causes, including changes in the regulatory environment and the mainland’s public health situation.
“Financial year 2021 was unprecedented in terms of challenges brought on by persistent Covid-19 pandemic, macroeconomic policies and financial difficulties surfacing at companies, leading to financial distress and significant reduction of liquidity,” R&F chairman and co-founder Li Sze-lim said in announcing the results.
Having recently won an extension on $5.1 billion in offshore bonds, which stands as Asia’s largest real estate debt restructuring, the Guangzhou-based developer made the statement after it had submitted a warning regarding the outsized loss to the Hong Kong exchange on Friday.
Sales Head Downhill
With homebuyers growing leery of China’s indebted developers, R&F said its contracted sales last year declined to RMB 120.2 billion, which was down 20 percent from 2020 and its revenue shrank 11 percent to RMB 76.2 billion.

R&F co-founder Li Sze Lim
After reporting a net profit of RMB 9.1 billion in 2020, a write-down of almost RMB 15 billion on the value of its assets, lower average home prices and higher operating expenses all contributed to its RMB 16.4 billion 2021 loss, the developer said.
R&F warned investors after the market closed on Friday that its net loss for 2021 would widen from what was reported in its unaudited earnings report published on 31 March as it needed to write down another RMB 6.9 billion of inventory value.
During 2022, the company has struggled to regain the confidence of homebuyers, with R&F having achieved contracted sales of RMB 24.4 billion in the first seven months of this year according to research by China Securities, with that performance down 79.7 percent from the same period of 2021.
Fitch Ratings on 18 July, following the release of R&F’s restructuring plan, downgraded its long-term issuer default ratings for the group and its subsidiaries’ to RD (restricted default) from C.
R&F’s Hong Kong-listed shares dipped 2.3 percent Monday and closed at HK$1.69 (US$0.22). The developer’s share price has now slid 42 percent this year.
Land Bank Spending Down 80%
Hobbled by its liquidity crunch, in 2021 R&F significantly reduced its capital expenditure on land acquisition and stepped up asset disposals.
The developer spent only RMB 3 billion on new land acquisition last year, which was down 80 percent from 2020. In its results announcement, R&F reassured investors that its land bank of 49.97 million square metres (538 million square feet) will be sufficient for the next few years and would allow the company to generate RMB 713.1 billion of saleable resources.
Asset disposal was a “particularly successful” strategy that helped R&F enhance liquidity in 2021, the company said, as banks became more cautious about lending, investors withdrew capital, and homebuyers adopted a wait-and-see attitude.
Last December, R&F sold 30 percent of its Guangzhou International Airport R&F Integrated Logistics Park to Blackstone for RMB 3.4 billion ($540 million), after closing on its $1.1 billion sale of 70 percent of the distribution centre to the US fund manager in January.
The asset sales have continued this year with the company taking a loss of $90 million based on market valuation in order to bring in $124.8 million through the sale of its Vauxhall Square project in London during March.
In May, R&F sold its 50 percent stake in Thames City, a London joint venture with fellow Chinese developer CC Land, to the latter firm’s chairman for HK$2.66 billion (US$340 million), and booked a loss of HK$1.84 billion ($230 million) on that disposal.
Happy Days on the Way
The cash-strapped developer expects market conditions to improve in the second half of this year as it predicts improved pre-sales and looks forward to orderly management of financial risks in the sector.
With RMB 220 billion of saleable resources from over 200 projects ready for pre-sale, R&F said it will focus on making money from pre-sales of properties in 2022.
The developer does not expect further asset devaluation in 2022, and plans to continue to dispose of non-core assets to raise cash.
“As market prices begin to normalise, and buyer and seller expectations’ gaps narrow, the group expects the ability to close more assets sales can be achieved in 2022 to provide an additional source of capital,” it said.
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