Chinese property developer CIFI to offload Australian assets at a loss in bid to inject cash as credit dries up

This is the third time in two months that CIFI Holdings has planned an asset disposal at a loss amid its battle to restructure debt

The company said cash raised from the sale would help ease offshore liquidity pressure and finance its business operations

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CIFI Holdings (Group) headquarters in Shanghai. Photo: Handout

Published: 2:00pm, 15 Feb 2024Updated: 2:02pm, 15 Feb 2024

CIFI Holdings has agreed to sell a 60 per cent stake in 16 parcels of land in Sydney to an Australian company for A$66.3 million (US$42.9 million), booking an estimated loss of A$11.1 million in the process, the distressed Chinese developer said.

This is the third time in two months that CIFI Holdings has revealed a plan to dispose of its assets at a loss, as the developer continued to restructure its debt.

Zerlina Zeng, analyst at CreditSights, said the divestment of the Sydney project showed the developer’s willingness to sell assets at a loss to replenish liquidity, but it was way too early to conclude that CIFI has the willingness and ability to work out a debt restructuring plan with creditors.

“We expect CIFI’s liquidity condition to remain strained in 2024 with contracting contracted sales, limited new funding from banks and the onshore bond markets, and difficulties in disposing its China investment/residential property assets amid a prolonged property downturn,” Zeng said.

CIFI Holdings to sell a 60 per cent stake in 16 parcels of land in Sydney. The asset is comprised of 16 adjacent plots of land on Berry Road, Holdsworth Avenue and River Road in St Leonards, a suburb in Sydney and less than a 10-minute drive from the city’s central business district. Photo: Google map

The company said in its stock exchange filing that it had been actively exploring opportunities for offshore asset disposal to ease the group’s offshore liquidity pressure and to finance its business operation.

“Due to the interest rate hikes and the rise in construction costs in Australia, the financing costs and development costs of the property are expected to increase. The directors consider that the CIFI disposal allows the group to prevent incurring the said extra costs and further tightening the offshore liquidity, and capture the good opportunity to sell the interest in the property under the prevailing property market in Sydney.”