Vanke's thrilling breakthrough.

The Chairman of Vanke, Yu Liang, is pictured in the image above.

Author: Cao Anxun

Editor: Zhou Zhiyu

Vanke, which was embroiled in a short-selling storm, has finally dispelled the clouds of the past and seen a significant rise in its stocks and bonds.

On March 12th, Vanke led the gains in the A-share and Hong Kong stock markets in the real estate sector, with Vanke's A-shares rising by 5.71% and CHINA VANKE's stock price increasing by 10.33%. Several of Vanke's domestic and foreign bonds also surged, with some medium to long-term bonds rising by over 20%.

The surge in Vanke's stocks and bonds is related to a rumor. It was reported that several banks are arranging a syndicated loan of up to RMB 80 billion (USD 11.5 billion) for Vanke to meet the upcoming maturity of its public market bonds.

According to sources from various banks, Vanke has indeed been in talks with banks recently to explore relevant solutions to alleviate financial pressure, but the negotiations are still in the early stages.

Analysts from securities firms also believe that it is unlikely for the full RMB 80 billion to be raised at once, with most of it being used for debt "long-short substitution." "If this substantial financial support for the leading real estate company materializes, it will be a milestone event in the current downturn of the real estate market."

Previously, Vanke had discussions with insurance institutions regarding non-standard debts. It was also revealed by industry insiders that several insurance institutions have reached agreements with Vanke to accept new repayment arrangements. These arrangements are aimed at gaining support from various creditors and adjusting the current debt maturity structure.

All these efforts by Vanke come after it recently weathered the storm of short-selling, hoping to further resolve the financial challenges it faces and successfully navigate through the pains brought by the transition between industry cycles.

Foreign institutions have responded very positively to these developments. Citibank boldly stated on March 12th that after a three-year deleveraging cycle, the Chinese real estate industry is improving, taking a neutral to bullish stance for the third quarter.

Citibank mentioned that the support from banks to Vanke and the recovery in Vanke's sales will be positive factors supporting the improvement of the real estate industry's health.

Clearly, after experiencing the coldest sales month in recent years, positive factors in the market are gathering momentum.

Senior officials from the Ministry of Housing and Urban-Rural Development recently issued statements to support the real estate sector and provided strategies for real estate companies like Vanke to "survive." The efforts made by top real estate companies like Vanke, along with the support from financial institutions and creditors, are gradually reversing the market's pessimistic sentiment.

In the eyes of many industry insiders, although Vanke has passed the phase of short-selling, as long as "the market does not fundamentally improve, (short-sellers) will come back."

Therefore, Vanke, having overcome one obstacle, cannot afford to be complacent. It needs to consider how to seize the support from financial institutions, establish medium to long-term "self-sustaining capabilities," and maintain a solid credit and fundamental position of "zero defaults" until the market fundamentally improves. From Vanke's own preparations, it has made comprehensive preparations for its debts within the year. On March 11th, Vanke has fully repaid the US dollar bonds due on that day.

Vanke has stated that up to now, nearly half of its overseas public bonds due within the year have been repaid. The remaining two overseas bonds due in May and June will be repaid through three methods, including overseas own funds, dividends from domestic projects or equity transfer funds obtained by overseas subsidiaries, and overseas syndicated loans.

To further gain support from financial institutions, Vanke needs to reassure them. This means that it needs to provide more financing guarantees or use high-quality assets as collateral. This is also a key point of disagreement between Vanke and financial institutions in the debt replacement arrangements.

In addition, Vanke is also expanding the new imagination space for real estate financing and profitability under the warm breeze of REITs policies.

Recently, Vanke has achieved a lot in the field of REITs. On March 1st, Huaxia Wanwei Warehousing and Logistics Closed-end Infrastructure REIT was accepted by the Shenzhen Stock Exchange. Previously, Zhongjin Yinli Consumer REIT was selected as one of the first batch of public REITs for consumer infrastructure. According to Wall Street News, Vanke's long-term apartment REIT is also actively applying.

Vanke has become one of the very few domestic companies to achieve breakthroughs in REITs in multiple operational real estate tracks, which provides Vanke with new financing channels, unlocks the value of existing assets, promotes more efficient operation of assets and funds, and offers more possibilities.

While seeking support on the financing side and exploring new directions, Vanke is also actively seeking change.

On March 8th, Vanke carried out a new round of organizational restructuring in the southern region, reducing the original 12 city companies to 8. Vanke's southern region stated that this is to proactively adapt to changes in the market environment, making the organization more flexible, efficient, and responsive to project needs in a timely manner.

This also indicates that Vanke is trying to enhance regional competitiveness by focusing on regional development, concentrating resources to increase regional sales, and aiming to explore more sales opportunities in the region. Since the beginning of this year, many real estate companies such as China Resources Land, China Merchants Shekou, and Greentown have made regional deep cultivation a strategic focus and have made corresponding organizational and personnel adjustments. These are all preparations made in response to market changes.

The market is also sending positive signals. Data from institutions such as Zhongyuan and Le You Jia show that in March, the number of visits to new housing sales offices in cities like Shanghai and Nanjing has increased compared to the previous month, and second-hand transaction volumes have also grown. The active promotion of new projects by real estate companies and the increase in consumer willingness to purchase have brought a long-lost warmth to the market. Citibank believes that from the weekly data, the industry's health condition is improving.

However, before the market fully recovers, everyone still needs more confidence.

This is also the key point that continues to attract attention to actions of high-quality real estate companies like Vanke after the "short-selling" storm. The situation of indiscriminate attacks and being "short-sold" needs to be changed, and the industry also hopes that Vanke, a "good student" who has been steadfast for 40 years, will continue to find the direction for development in the new era.