Sunac recovers and "comes ashore"

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Author | Zhou Zhiyu

Editor | Zhang Xiaoling

Recently, Sun Hongbin, who has long avoided public appearances, made a low-key visit to Chongqing to inspect Sunac's key project in the area—the Chongqing Bay. His appearance signals that the bold and action-driven Sunac is returning to the proper track of business operations.

On December 23, Sunac China officially announced that its offshore debt restructuring plan has come into effect immediately. This means that the debt risks at the listed company level have been completely resolved and a solid foundation has been laid for a comprehensive business recovery. It also marks that, after three years of deep adjustment, Sunac has officially completed comprehensive restructuring of both onshore and offshore debts, entering a new phase of sustainable operational recovery.

Sunac has finally arrived at the moment to move forward lightly.

According to the restructuring plan, Sunac’s offshore debts are basically "zeroed out," completely eliminating the debt risks at the listed company level. Through measures such as debt-to-equity swaps, Sunac’s overall debt repayment pressure is expected to decrease by nearly 60 billion yuan, net assets will be boosted, and financial stability will be greatly enhanced.

Sunac's path to solving its debts is a systemic breakthrough.

In the early stages of industry adjustment, Sunac did not choose to lie flat. Instead, it completed the first step of "trading time for space" by extending 16 billion yuan in onshore public bonds, becoming a benchmark case for policy implementation at the time. However, as the depth and breadth of industry adjustment far exceeded expectations, dual pressure from sales and financing made mere extensions unsustainable.

Faced with difficulties, the industry urgently needed an effective solution to fundamentally solve debt problems. With a market-oriented mindset, Sunac pursued a "combination punch."

From restructuring onshore public debts in January this year to the formal effectiveness of the offshore debt restructuring now, Sunac has advanced one of the industry's largest and most complex restructuring cases in terms of creditor structure. This solution is not only highly innovative but also highlights Sun Hongbin's personal commitment— the major shareholder deeply bound his interests with the company, providing personal unlimited joint liability guarantee for the domestic bond extension, and later, in the offshore debt restructuring, converting the previously offered US$450 million interest-free loan into equity under the same conditions as creditors.

This commitment to sharing risk eventually won a high approval rate of 98.5% from creditors, enabling this solution to be quickly adopted by a large number of real estate companies and having extraordinary significance for accelerating the clearing of risks across the entire industry.

For a real estate company in the recovery period, this is tantamount to obtaining a "ticket to rebirth." Successfully resolving the debts has further consolidated confidence among all parties, paving the way for risk resolution at the project level, asset revitalization, and the restoration of long-term credit.

The data doesn’t lie. Alongside the debt restructuring, Sunac’s business fundamentals have also fully revived. This year, Sunac expects to deliver more than 50,000 new homes, with a total of more than 700,000 homes delivered over four years, taking the lead in the industry in completing all guaranteed delivery tasks.

On the product side, Sunac has returned to center stage with its high-quality assets and strong product capabilities. Shanghai One Court achieved annual sales of over 22 billion yuan, topping the national ranking for single project sales; Beijing Sunac One Court is stably in the top three for luxury homes over 30 million yuan in online contracts in Beijing; Tianjin Meijiang One Court Phase II ranked first in the high-end market; Wuhan Guanggu One Court sold nearly 90% of units on its opening day. These figures prove that Sunac’s "golden brand" still holds strong appeal in the luxury housing market.

Sunac’s successful restructuring is not unique, but a microcosm of the industry's accelerated risk clearing.

This year, the process of debt resolution in real estate has continued to accelerate, with the industry moving from individual breakthroughs to collective "icebreaking." According to incomplete statistics, so far, 21 distressed real estate companies have completed debt restructuring or reorganization.

Behind these numbers is the establishment of a core consensus in the real estate industry: resolving debt risk is the key prerequisite for real estate companies to restore healthy operations. From the initial state of bewilderment to the recent string of successful breakthroughs, the industry has explored a viable path.

During this round of industry-wide self-rescue, Sunac, as the first large real estate company to complete comprehensive onshore and offshore debt restructuring, broke new ground with its innovative multi-party win-win solution, offering an invaluable benchmark sample for more companies seeking relief. Industry experts have pointed out that Sunac’s path to debt resolution profoundly reflects the leading efforts of real estate companies to restore normal operations during cyclical fluctuations and provides important referential value for judging the direction of industry risk clearance.

With the effectiveness of the offshore debt restructuring, Sunac has officially entered a new virtuous cycle.

Reviewing Sunac’s assets, its total land reserves exceed 124 million square meters, with nearly 70% located in core first- and second-tier cities. These high-quality asset reserves, once the debt shackles are removed, will provide solid support for Sunac’s subsequent asset revitalization and value recovery.

Sun Hongbin’s appearance at Chongqing Bay may be just the beginning.

From the darkest moment three years ago to now, joining 21 other industry peers in welcoming the dawn of debt restructuring, Sunac has enacted with practical action a breakout story of a "phoenix rising from the ashes."

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