Research On The Ways And Effects Of Deleveraging In Real Estate Companies

In 2015,the Chinese government mentioned it as an important place of the supply-side reforms of “three go,one drop and one supplement”.In recent years,high leverage has become an important issue in China's economic development.As the economic pillar of our nationals,in the past decades,the real estate industry has developed rapidly and the leverage ratio has risen rapidly,far exceeding the “70%” of the red line.The real estate market is closely related to people's life,financial institutions and some other industries,for which the high asset-liability ratio of real estate enterprises is likely to cause systemic risks.The deleveraging of real estate enterprises has become the top priority in the task of deleveraging.Therefore,this paper selects the real estate enterprises as the research object.The perspective of this paper is mainly based on the real estate enterprises itself,and this paper is to study what measures it can take to reduce the leverage ratio.Based on the relevant literature of deleveraging approaches and the characteristics of real estate enterprises,this paper concludes that the deleveraging measures of real estate enterprises can be analyzed from two aspects: improving the external financing status of enterprises and enhancing the internal financing ability.Specifically,there are three ways to strengthen external financing status: the first one is to reduce capital demand,such as reducing capital expenditure,improving asset operation efficiency,optimizing business model;the second is to adjust external financing structure;the third is to expand financing channels and innovate financing methods,such as asset securitization,debt-to-equity swap,choosing market-oriented financing options with lower financing cost and lower risk.The other aspect is to enhance the internal financing ability of enterprises,that is,from the perspective of carrying forward profits.In addition,through the case analysis of Central China Real Estate Company(CCRE),the paper analyzes the theoretically deleverage methods adopted by the case company and the effect on the case company of such measures,and provides some suggestions for other real estate enterprises.First of all,this paper elaborates on the research background,research significance,domestic and international research review of this paper.Secondly,it mainly expounds the concept of leverage and basic theoretical knowledge involved in this thesis.Thirdly,it analyzes the current situation of China's real estate industry,mainly introduce the sales and investment situation of real estate industry and the financial characteristics of the real estate industry.Fourthly,this paper takes CCRE as the case study object,introduces its fundraising situation and debt situation in recent years,and analyzes the four measures and the effect the case company take: to reduce the capital demand,adjust the external financing structure,innovate financing methods and enhance the internal financing ability.