Chinese media “Punch News” quoted news that Zhongnan Construction, controlled by billionaire Chen Jinshi, is selling properties to employees at a discount of up to 65%. Zhongnan Construction responded, saying that this is an annual employee housing benefit, but now the regulation and control policy is strict, so there is more attention from all sides.
The Punch News reported on Tuesday (20) that Zhongnan Construction is selling homes to employees at a discount, with the offer ending on July 20. According to the staff, the specific sales rules and discounts vary from “war zone” to “war zone”, some places have a residential discount of 65%; some places have a discount of 70% or 80%, while commercial properties are 65%.
Zhongnan Construction responded to The Surge News, saying that this is a staff housing benefit for individual projects, and is a “one plate, one policy” of the project itself according to the market situation, which is a regular marketing action. The China Securities Journal quoted the person in charge of Zhongnan Construction as saying that this is a staff housing benefit, which is available every year and is relatively hot; no one paid attention to it in previous years, but now the regulation and control policy is relatively strict, so all parties pay more attention to it.
Surfing News reported that Zhongnan Construction has a debt of 1.134 billion yuan, which will expire on July 27. And as of the end of 2020, Zhongnan Construction had total liabilities of about 310.89 billion yuan, 120.29 billion yuan of pre-receivables and 79.90 billion yuan of interest-bearing liabilities.
In August last year, China’s Ministry of Housing and Construction, the People’s Bank of China and other departments drew “three red lines” for developers, including the requirement that the gearing ratio of real estate enterprises should not be greater than 70% after excluding pre-receipts; the net debt ratio of real estate enterprises should not be greater than 100 %; and the “cash to short term debt ratio” of real estate enterprises should be less than 1. The “cash to short term debt ratio” of real estate enterprises is less than 1.
At present, the net debt ratio of Zhongnan Construction is 90.27%, the gearing ratio after excluding pre-sales is 79.76%, and the cash to short term debt ratio after deducting restricted funds is 1.04. i.e. two indicators meet the standard and fail to fully achieve the regulatory requirements. Chen Yuhan, director and deputy general manager of the group, has said that he is confident that the “three red lines” will be achieved by the end of next year at the latest.
In February this year, the real estate developer Evergrande also announced that it would sell its properties at a 75% discount, and also gave different degrees of additional benefits in terms of down payment and mortgage to achieve a “discount after discount”.