BEIJING, February 9 (TMTPOST)— China Evergrande Group set an ambitious target for home delivery this year as the Chinese real estate giant is scrambling to meet its debt obligations.
Source: Visual China
Evergrande aims to delivery about 600,000 new homes in the year 2022, with the total footage of about 70 million square meters, which suggests nearly 50% of the company’s overall proposed deliveries have to complete this year, the founder and chairman Hui Ka Yan said in an internal meeting at the past weekend.
Hui admitted the difficulties his company faced. “When we were in normal operation, the company usually had huge capital inflows and outflows, such as 2019 and 2020 saw the flow of RMB1.3 trillion and RMB1.2 trillion respectively, and we used to deliver about 500,000 or 600,000 homes in the peak season. However, our company began to get into (debt) trouble in last June and almost not any capital inflow had been seen since last September,” Hui said.
Hui noted Evergrande had at hand more than RMB50 billion (US$7.9 billion) from as presold homes, basically meeting the need for fully restoring construction. As to how the construction can keep going following the resumption, it relies on about RMB170 billion (US$26.9 billion) of cash in escrow accounts, including RMB80 billion from sales and nearly RMB90 billion from saleable sources, which is also the foundation of home delivery, he added.
At the end of a speech at that meeting, Hui stressed one of the most important principles Evergrande staff shall follow is not to sell any company’s assets at heavily discounted prices. “I has been highlighting no fire sales at any time since last June, ” he explained, “We can’t repay creditors by fire sales, for the debt pile is very hard to clear even if we sell off at prices well below market value.”
As the largest real east developer by issuance of offshore, Evergrande has sold US$17 billion of debt in 2020 and its U.S. dollar-denominated debt stood at US$19 billion in 2021, when its liabilities had totaled US$300 billion as of the year and sparked increasing worries about its ability to repay the debt.
According to Evergrande’s figure last month, it delivered 37,899 apartments in December, missing the monthly target of 39,000 units, but 92.9% of projects across China have resumed construction as of the end of that month, higher than the ratio of 91.7% it released a month earlier. Hui said his company planned to completely restore construction this month in the weekend meeting.
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