"Three Red Lines" Financing New Regulation Arrow On The String, Real Estate Enterprise "Debt" Not Moving Many Worries

The rain is coming, and the wind is all over the building.

On August 20, the Ministry of housing and urban rural development and the people's Bank of China held a forum on key real estate enterprises in Beijing. The meeting pointed out that in order to further implement the long-term mechanism of real estate, implement the prudent management system of real estate finance, and enhance the marketization, regularization and transparency of real estate enterprise financing, the people's Bank of China, the Ministry of housing and urban rural development, together with relevant departments, have formed capital monitoring and financing management rules for key real estate enterprises on the basis of extensive consultation in the early stage.

Before that, the "three red lines" as the standard of real estate financing management policy spread in the market. The 21st century economic report has confirmed this news from many channels, but the specific implementation scale and operation details of the policy need to be further refined. According to media reports, participating real estate companies are required to submit the latest balance sheet before the end of September.

The tightening of real estate financing policy is on the way. However, before the implementation of the policy, all kinds of analysis and speculation emerged in an endless stream, and the real estate industry, which had just recovered from the epidemic, fell into turmoil again.

Analysts believe that if strictly implemented, the financing scale of real estate enterprises will be limited in the future, which will not only affect the land acquisition and financing strategy of enterprises, but also face the end of the era of rapid expansion with the help of "high leverage". Now, everyone is waiting for the "boots" to officially land.

Or in the form of pilot projects

The strengthening of supervision on real estate financing management has a track to follow in the near future. On July 24, the "real estate work forum" was held with a rare high standard, and for the first time, it was proposed that "we should implement the prudent management system of real estate finance, stabilize the stock, strictly control the increment, and prevent the illegal inflow of funds into the real estate market".

On August 13, the 21st century economic report exclusively reported that "three red lines" would be taken as the standard for the management of real estate enterprise debt. Specifically, red line 1: after excluding advance collection, the asset liability ratio is greater than 70%; red line 2: the net debt ratio is greater than 100%; red line 3: the cash short debt ratio is less than 1 times.

According to the different situations of "three red lines", the real estate enterprises are divided into "red, orange, yellow and green": all the three indicators are "treading on the line", and the interest bearing liabilities shall not be increased; if two items of the indicators are "treading on the line", the annual growth rate of the scale of interest bearing liabilities shall not exceed 5%; if there is only one "treading on the line", the annual growth rate of the scale of interest bearing liabilities can be relaxed to 10%; if all indicators meet the regulatory requirements If required, the annual growth rate of interest bearing liabilities can be relaxed to 15%.

The forum held on August 20 once again strengthened the expectation of tightening the financing policy. Although the official information on financing has been very clear, it has been very limited.

The 21st century economic report learned from authoritative sources that 12 real estate enterprises participated in the meeting, namely country garden, Evergrande, Vanke, rongchuang, Zhongliang, poly, Xincheng, Zhonghai, Oct, Greenland, China Resources and sunshine city.

The 21st century economic report also learned that the keynote of the above-mentioned meeting was mainly discussion, and the main purpose of the regulatory authorities was to understand the relevant situation through the discussion with several large-scale real estate enterprises. However, the implementation schedule of relevant policies was not released on that day.

It is understood that "reducing debt" is the main signal conveyed at the forum. Regulators hope to control the risk of financial institutions and maintain the stability of the real estate market by reducing the debt of real estate enterprises. However, this does not mean that all the participating real estate enterprises have to reduce their debts. According to the above-mentioned people, some enterprises with low debt ratio have no pressure to implement in this respect.

In the morning of August 28, a management of Greenland Hong Kong confirmed the news at the performance meeting. He said that what the company learned was that relevant departments had exchanged views with real estate enterprises, and there was no clear timetable for the implementation of the new financing rules.

It is also understood that the regulatory authorities have long considered the implementation of capital monitoring and financing management for key real estate enterprises, and there have been many rounds of soliciting opinions before. In the future, this policy is likely to be piloted in some enterprises and then gradually pushed forward.

The end of the era of high leverage?

"Vanke learned from the information released by the government that the regulatory authorities have issued capital monitoring and financing management rules for key real estate enterprises from the perspective of preventing financial risks in the real estate industry. The company will seriously study this, adapt to it as soon as possible, and implement them according to the requirements." As for the new financing policy, at the mid-term performance meeting of Vanke on August 28, president Zhu Jiusheng of Vanke said.

In the public statement, most of the real estate enterprises call this policy a kind of "standard", and think it is of great benefit to the healthy development of the industry. However, if the actual consideration is based on the "three red lines", there are not many enterprises that can be independent.

According to the financial data of 2019 and the standard of "three red lines", Tianfeng securities divides 50 real estate enterprises with high sales volume. Among them, there are 14 real estate enterprises stepping on the "three red lines" at the same time, 10 real estate enterprises stepping on two red lines, 14 real estate enterprises stepping on one red line, and only 12 real estate enterprises not treading on the line.

If they are located in the "four" of the central enterprises, they are all located in the "Huarun" and "Huaqiao group", and all of them are located in the "Huarun" and "huaqiaohui".

"If this standard is applied to all enterprises, the scope of the policy can be imagined." A person from a large real estate enterprise in Beijing told the 21st century economic report that for many years, the real estate industry has mainly relied on debt to achieve scale expansion, and high debt often leads to high growth. If the size of the debt is controlled, it means that the era of expansion through high leverage will come to an end.

In the short term, if the debt scale is controlled, it will also trigger a series of chain reactions.

At the recent mid-term performance meeting of real estate enterprises, many real estate enterprises mentioned their views on this policy. In addition to the emphasis on reducing debt and collecting funds, many enterprises have begun to pay attention to land acquisition and investment, so as to improve the efficiency of capital utilization.

Chen Zhuolin, chairman and President of the board of directors and President of Yajule, said, "we can't take land indiscriminately now. In the second half of the year, we will have better opportunities to arrange mergers and acquisitions or other industries. If there is no good land or good project in the second half of the year, we will take the land next year, because it is very painful to get the wrong land. "

According to the 21st century economic report, many real estate enterprises have obtained the original text of the above-mentioned documents and have begun to study them. The main problem they are facing is that they do not know the specific policy details and implementation scale. Some real estate enterprises have already communicated with familiar financial institutions, and have not received a definite reply. Some Beijing real estate enterprises disclosed to reporters that financial institutions are also waiting for the official issuance of relevant guidance documents.

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