LONGFOR GROUP launches a strong counterattack against the short sellers.

On the occasion of the real estate market facing a "late spring chill", worries in the market have once again spread to stable property enterprises. Not only has the top-performing real estate company Vanke been targeted for short-selling, but the shorts have also set their sights on the representative of high-quality private real estate companies, LONGFOR GROUP. Recently, several bonds of LONGFOR GROUP have experienced significant declines, and the stock price has been sliding for several days.

Taking advantage of the policy relaxation by the central bank on the use of commercial property loans, LONGFOR GROUP proactively repaid 4.61 billion yuan in debt 9 months ahead of schedule, launching a strong counterattack against the shorts to prove the safety of its funding chain.

On March 8th, LONGFOR GROUP made an early redemption of 46.1 billion yuan of CMBS due to mature in December 2024.

According to sources close to LONGFOR GROUP, the funds for this repayment came from commercial property loans, specifically by replacing the debt with new commercial property loans to optimize the debt structure and extend the debt duration.

This move is expected to boost market confidence. Previously, several forward bonds of LONGFOR GROUP experienced significant declines. For instance, on March 4th, a bond of LONGFOR GROUP with a maturity date in April 2027 and an interest rate of 3.375% dropped by 3.4%, marking the largest decline in three months.

The source of repayment for LONGFOR GROUP this time is a new attempt. On January 24th, the General Office of the People's Bank of China and the General Office of the China Banking and Insurance Regulatory Commission jointly issued the "Notice on the Management of Commercial Property Loans", announcing that funds from commercial property loans can be used to repay public market bonds of real estate companies, and the loan amount has been increased.

Li Yujia, Chief Researcher of the Housing Policy Research Center of the Guangdong Provincial Urban Planning Institute, believes that this will maximize the operating value of enterprise existing properties and the value of cash flow, reducing the overall risk of the enterprise.

After the repayment of this CMBS, LONGFOR GROUP will only have 5 domestic public bonds due for redemption or with rigid maturity within 2024, with a total outstanding amount of 6.01 billion yuan. There are no domestic corporate bonds due in the first quarter, and the redemption dates are well spread out, without concentrated redemption pressure, further thickening the "safety cushion".

Moreover, LONGFOR GROUP is also making preparations in advance. The aforementioned source stated that LONGFOR GROUP has already fully prepared the funds for the redemption of domestic corporate bonds due in May. In addition, there are no overseas public bonds due for redemption by LONGFOR GROUP until the end of 2026.

In fact, to counter the shorts, LONGFOR GROUP has proactively repaid debts several times since last year. In addition to the mentioned CMBS, LONGFOR GROUP has already redeemed or made early redemptions of domestic bonds totaling 5.7 billion yuan this year. Last year, it also repaid 15.3 billion Hong Kong dollars of syndicated loans in advance, clearing all overseas debts due in 2024. LONGFOR GROUP's confidence in early debt repayment comes from its industry-leading sales performance, operational cash flow, and ample financing channels.

In the first two months, LONGFOR GROUP achieved a total sales volume of 12.5 billion RMB, despite a halving compared to the same period last year due to the overall economic environment, it still firmly holds a position in the top ten in the industry.

In addition, LONGFOR GROUP maintains smooth financing channels. According to a research report by DBS Bank, LONGFOR GROUP is known for its prudent financial management and is the only private real estate enterprise with an investment-grade rating in the industry turmoil. It has excellent financial management discipline, and its balance sheet is resilient.

After the innovative financing channel repayment by LONGFOR GROUP, more real estate enterprises are expected to replicate LONGFOR GROUP's experience by using operational property loans to repay debts.

This signifies that as the real estate market enters a period of stock, and development business comes under pressure, the value of operational properties will continue to be highlighted. This will help real estate enterprises improve liquidity, alleviate debt pressure, and those looking to thrive and survive in the long run should pay more attention to operational properties.

With the frequent policy benefits for operational properties, real estate enterprises like LONGFOR GROUP, which hold a large number of operational properties, are expected to rely on their operational skills and sound financial principles to welcome the arrival of a brighter future.