Developer Kaisa’s unit, in debt, lacks interest Payment of trust loans

(Yicai Global) May 12 — A unit of struggling Chinese property developer Kaisa Group has failed to pay the first quarter payment of a trust loan.

Kaisa East Daihe Real Estate Development has defaulted on the loan it borrowed from JIC Trust’s fiduciary product for a project the real estate company is developing in northeast China’s Liaoning Province due to the declining sales, increased difficulty in raising funds and greater liquidity pressures, which are mainly due to the macroeconomic situation and industry regulatory policies, the lender told Yicai Global, citing a report that he received from the borrower.

There is a risk that the loan may not be repaid on time, JIC Trust added, noting that it may not be able to recover even the principal. Sanhe Zhaolong Jiaye Real Estate Development, in which Kaisa holds a 70% share through its Kaisa Real Estate Beijing unit, serves as co-beneficiary and pledger of the loan, with a project in Yanjiao city, Hebei province. , warranty.

JIC Trust has asked a court to freeze Kaisa East Daihe’s assets because the borrower failed to pay CNY 13.4 million (USD 2 million) in interest on March 15, Yicai Global learned from a report that investors of the entrust product received on April 26.

Trust product Anquan No. 585 was founded in December 2020 and raised CNY 449.7 million (USD 66.8 million) in three rounds. The money was mainly used by Kaisa East Daihe to finance the Kaisa Costal Town No. 1 project in Suizhong County in Liaoning.

The product’s Class I and Class II trust funds had a maximum expected return on investment of 7.2% and 7.4%, respectively. The Class I fund’s interest payment date is June 15 each year and the Class II fund’s interest payment date is December 15. Proceeds from the first phase will be due on June 30.

The sales income of the Liaoning and Hebei projects, the operational cash flow of the guarantor and the transfer value of the guarantee are the main sources of reimbursement of the fiduciary product, according to promotional and informational materials published by Anquan No. 585.

The trusted product has pledged that the Liaoning project will “open for sales in 2019,” but construction has been halted. Meanwhile, the Hebei project has yet to obtain planning and construction permits from local authorities due to planning adjustments.

To claims that various JIC Trust products have entered the scheduled six-month extension period, the trust company responded that to urge borrowers to repay the money, protect legitimate rights and minimize the interests of investors , it will initiate measures, including the negotiation of an extension, implementation of the guarantee and litigation.

Editors: Zhang Yushuo, Futura Costaglione

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