China

Chinese Investors Concerned About Rapid Growth of R&F Properties’ Debt

Summary:

  • Chinese Investors are concerned about the rapid growth of R&F Properties’ (2777.HK) debt, as reported by Sina.
  • The debt of the company has increased by RMB 12 billion within the last month.

Why It Matters:

  • By the end of October,  the total debt of R&F Properties amounted to RMB 139.9 billion, much higher than the RMB 120 billion at the end of 2016. The article suggests that the rapid growth of debt of the firm is related to the purchase of Wanda’s assets.
  • During the summer, R&F Properties announced it would take over 77 hotels from Wanda for RMB 19.2 billion. Also, during the first half of the year, the company aggressively acquired land properties which also required a large amount of cash.
  • R&F Properties’ major business is commercial real estate, the sales cycles of which are much longer than for residential real estate developers. Consequently, the company’s  fast growing debt has caused investors to become even more concerned.