XF Real Estate "Open Shares And Real Debt" Financing Risk Identification And Coping Strategies

Currently,real estate enterprises are mainly financed by financial institutions.Under the background of policy adjustment,in order to further regulate China’s real estate trust market,regulators require real estate developers to meet capitalization disadvantages of not less than 35%,four sets of relevant documents complete and have more than two levels of development qualification before they can carry out project financing.The current increasingly stringent trust loan conditions are such that many companies have to implement debt financing or equity financing.However,the cost of equity financing is relatively high in terms of the process of financing behaviour,and a large number of equity issues tend to dilute the equity of real estate enterprises themselves,which is not conducive to the sound operation of real estate enterprises.Therefore,the "equity financing" model,which can achieve a more balanced effect in terms of real estate enterprise control and financing amount,has emerged to meet the financing needs of real estate enterprises and is more common within real estate enterprises.The study found that the implementation of equity and debt financing by real estate companies has obvious characteristics in terms of contracts and financial data,as the funds obtained from the "equity and debt" financing model have certain debt characteristics and these liabilities are "whitewashed" in the financial statements.These liabilities are"whitewashed" in the financial statements.As a result,the company is prone to illogical changes in minority earnings,income from other assets and gearing excluding pre-receivables.The "equity in debt" financing model can lead to a significant increase in revenue other than the main business income,and the company has to sell its assets or otherwise increase the revenue at its disposal in order to distribute the profit to the minority shareholders who injected the capital.In terms of risk analysis,the current risks associated with XF Real Estate’s "explicit equity and debt" financing are mainly focused on the risks of document approval,construction and operational regulation adjustment in terms of policy risk,revenue fluctuation risk and construction risk in terms of financial risk.This study takes a typical real estate enterprise as a specific case study,and through a multi-dimensional study of the "equity in debt" financing model,a systematic case report is written to enrich the research literature in the field of special financing for the real estate industry in China and provide theoretical guidance for relevant stakeholders.At the same time,the research on the identification of "explicit equity in real debt" by real estate enterprises and financial institutions to disguise project information will also help China’s regulators to have a deeper understanding of the characteristics and regulatory elements of this type of financing model.Therefore,this study is of great practical importance in identifying and assessing the risks of XF Real Estate Group’s "equity in debt" financing.