| Since China’s supply side reform included deleveraging as one of the five major economic tasks in 2015,the government has successively introduced a series of deleveraging policies to curb high leverage in non-financial industries.Given that the real estate industry plays a pivotal role in the current national economy,and the risks of high leverage operations by real estate companies have become increasingly prominent in recent years,the real estate industry has naturally become a key industry for the country to deleverage.In 2020,the Housing and Urban Rural Development Commission and other government departments jointly launched the "Three Red Lines" policy,hoping to achieve the goal of deleveraging by limiting the financing scale of real estate companies.Due to clear regulations and comprehensive supervision on the borrowing standards of real estate enterprises,the "three red lines" policy has become the strictest regulatory policy for real estate enterprises in history.Faced with such fierce and strict regulations,the need for real estate companies to deleverage is urgent.This article focuses on the use of literature research methods,case analysis methods,and other methods.Based on existing research at home and abroad,combined with balance theory,pecking order financing theory,and risk management theory,Huafa Group,a state-owned listed real estate enterprise,is selected as a case company to study the leverage path and impact of the "three red lines" policy.Firstly,by analyzing the problems behind the high leverage operation of Huafa Group,it is clear that there is a need for deleveraging.Then,it is found that after the introduction of the "Three Red Lines" policy,Huafa Group mainly adopted methods such as issuing perpetual bonds,controlling the scale of interest bearing liabilities,adjusting debt structure,asset securitization,improving capital operation efficiency,slowing down expansion speed,and controlling expenses to deleverage,Further evaluation of the effectiveness of Huafa Group’s deleveraging revealed that Huafa Group’s deleveraging has achieved certain results,with the three red lines fully turning green,the overall financial situation improving,and the business layout becoming more stable.However,the process of Huafa Group’s deleveraging is not perfect,and there are still issues such as insufficient profitability,low enterprise value,and high off balance sheet debt risk,Finally,this article proposes optimization suggestions for adjusting the company’s development strategy,enhancing corporate value,expanding diversified financing channels,and being vigilant against off balance sheet debt risks in response to the problems encountered in the deleveraging process of Huafa Group.The aim is to help other real estate enterprises actively and steadily complete deleveraging through the analysis of the case of Huafa Group’s deleveraging. |
