Shanghai Forte to cut debt, increase capital
Mainland property developer Shanghai Forte Land plans to sell homes worth 5.5 billion yuan (HK$6.24 billion) this year and raise 1.9 billion yuan from a proposed bond sale to cut debt and bolster its capital base.
With a land bank of 6.85 million square metres in 11 cities, including Shanghai, Beijing, Wuhan, Hangzhou and Changchun, the firm is aiming for contract sales of 625,000 sq metres this year. That is about 75 per cent more than the 356,000 sq metres sold last year.
Chief executive Fan Wei said the firm would release more new projects for pre-sale, as property sales had rebounded recently in some cities after the authorities launched support measures including lower mortgage rates and a reduction in transaction costs.
'As sales are picking up, a further downward price adjustment for new projects will be unlikely. But the firm's pricing strategy will be based on the market conditions in different cities,' Mr Fan said.
The company generated 350 million yuan from sales of 60,000 sq metres over the past two months, he said.
Forte's new projects could be sold at an average of 8,000 yuan per square metre, about 12 per cent below the 9,000 yuan level a year ago.
Forte would budget 5.2 billion yuan for capital expenditure for this year, including 1.2 billion yuan for land purchases and 4 billion yuan for construction.
The company's planned 1.9 billion yuan sale of domestic bonds should obtain approval from the China Securities Regulatory Commission this year to help reduce debt levels, he said.
Forte's total debt stood at 8.44 billion yuan at the end of last year, and the gearing ratio was 71 per cent.