Debt-hit R&F counts on upbeat overseas markets
Developer looks abroad for boost amid sluggish conditions in China
Guangzhou R&F Properties, one of the most indebted developers in China, is capitalising on upbeat sentiment in overseas markets where some of its projects are located to inject some relief into its operations and improve its creditworthiness at a time when the sector is experiencing sluggish conditions in the country.
The debt-stricken group was marketing projects in London, Australia, Malaysia’s Johor Bahru and Cambodia’s capital of Phnom Penh and leveraging buoyant sentiment in these markets, Garry Yau, R&F’s Hong Kong regional sales and marketing director, told the Post.
“The local markets in which some of the company’s projects are located have been booming recently. As the pandemic has passed, the market [momentum] has resumed,” Yau said, while highlighting the R&F Princess Cove project in Malaysia, which has seen Singaporeans and Malaysians rushing to buy.
Set up in 1994, R&F began rolling out its global strategy in 2013. It is now one of China’s largest property developers with overseas operations in Malaysia, Australia, Britain, Cambodia and South Korea.
Yau’s comments follow a difficult year when the company completed a debt restructuring programme that involved 10 tranches of US dollar-denominated notes totalling around US$4.9 billion.
R&F said in its financial report in March that, with unprecedented negative sentiment in recent years, various forms of refinancing were impractical.
“Hence, the group began assessing alternative options and engaged creditors early to seek a workable solution,” it said in the report, referring to its debt overhaul.
The company, which was unable to repay certain bank and other borrowings of 1.96 billion yuan (HK$2.18 billion) in January this year, was classified by Fitch Ratings as “in default on certain bank and other borrowings”.
The rating agency said the developer had completed 4.9 billion yuan of asset disposals in 2022 and more sales could emerge.
“We expect further asset disposals to provide additional liquidity. The company continues to seek opportunities for asset disposals and believes its hotel portfolio can attract investor interest,” Fitch said.
In a financial statement in March, R&F said: “Under the difficult economic environment and the financial turmoil, the group had to explore alternative means of sourcing liquidity. Over the past 18 months, the group had been disposing of assets in China and overseas as a means of generating cash flow.”
Yau said the company’s Malaysian developments could benefit from the pricier market in Singapore.
The R&F Princess Cove project in Johor Bahru is close to Singapore and suitable for those priced out of the city state’s surging market. Singapore’s limited land reclamation potential and soaring housing rents had a “spillover effect” in Johor Bahru where residential property prices are a lot lower.
“Singapore-Johor Bahru is like the Southeast Asian version of Shenzhen-Hong Kong,” Yau said.
The project was located on top of the Johor Bahru-Singapore Rapid Transit System Link, which was set to become operational in 2026, he added.
Cecilia Wong, business development director at Penta Global, said Malaysian property was attracting interest from those looking to buy retirement homes.
Property agency Fortune International said buyers were attracted to Cambodia’s housing markets because of the low prices there and the country’s favourable demographics.