Fuli Real Estate suffered a loss of approximately 16.6 billion yuan last year, and sales are still expected to face pressure this year.

Ask AI · What is the connection between R&F Properties’ massive losses and the industry’s downturn?

On March 31, R&F Properties (02777.HK) disclosed its full-year 2025 performance.

The financial data shows that in 2025, R&F Properties’ operating revenue was approximately 10.94 billion yuan, with a gross loss of about 1.628 billion yuan, an operating loss of approximately 8.872 billion yuan, an annual loss of about 16.601 billion yuan, and cash and cash equivalents of about 956 million yuan.

In 2025, R&F Properties’ total contracted sales were about 14.21 billion yuan, with a contracted sales area of approximately 1.8736 million square meters. Contracted sales were derived from 179 projects, distributed across 26 provinces in Mainland China and 3 countries overseas.

By city tier, first-tier and second-tier cities accounted for 59% of total contracted sales, third-tier cities and below accounted for 28%, and overseas accounted for 13%. By asset type, 57% of total contracted sales came from residential properties, 6% from villas, and 37% from commercial and other properties.

R&F Properties stated that the monthly fluctuations in contracted sales in 2025 narrowed compared with 2024. This trend reflects a deepening market understanding of the industry’s overall difficulties, along with a reduced sensitivity to completion risk for any single company. It is expected that contracted sales volume in 2026 will still face pressure after accounting for seasonality and holiday factors, but price fluctuations should narrow to single-digit percentage levels, and first-tier cities are expected to provide stronger support. If sales volume and prices can be kept stable, it will lay a foundation for broader, more normal development in the industry.

Regarding land reserves, as of end-2025, R&F Properties had total gross floor area under construction of approximately 7.514 million square meters and total saleable area of approximately 5.616 million square meters. Its land reserves had total gross floor area of about 45.863 million square meters, with a total saleable area of about 34.749 million square meters.

In addition, R&F Properties’ total borrowings were approximately 99.373 billion yuan. Of this, borrowings due within one year were about 93.387 billion yuan, borrowings due within one to five years were about 3.731 billion yuan, and borrowings due after five years were about 2.255 billion yuan.

In its annual report, R&F Properties mentioned that although there were policy adjustments, the real estate industry’s financial performance in 2025 remained relatively weak, and contracted sales revenue was unable to cover external expenditures. Although transaction volumes increased, they were still not enough to bring out a signal of sustainable recovery. Until the trends of transaction volume and prices become clearer, consumer confidence is expected to remain cautious.

In terms of debt restructuring, R&F Properties said that a substantial portion of the Group’s liabilities are USD senior notes issued through offshore subsidiaries. As the industry experienced a downturn in 2021 and the refinancing market subsequently nearly came to a standstill, the Group launched its first round of major liability management work in 2022. This effort ultimately succeeded through a consent solicitation process, completing the restructuring of all ten senior notes. The completion of the restructuring created space for the Group to further explore diversified options for deleveraging and asset disposal, during which the Group sold multiple development projects and completed assets.

However, given the continued deterioration of the operating environment, the Group must take further measures, including packaged asset sales and debt-to-equity swap transactions conducted at below the debt’s face value, in order to significantly reduce its overall debt exposure.

In 2024, the Group initiated preparations for the second round of comprehensive restructuring of the remaining senior notes. The relevant notes were consolidated into three notes with different maturity dates. After assessing market conditions and peer restructuring results, the Group believed that a court-approved arrangement plan would be a more effective implementation path. The plan was officially launched in December 2024 and received strong initial support. After further communication with investor groups, in the second half of 2025 the Group revised the plan based on market feedback. Subsequently, the plan obtained approval of more than 77%, allowing it to move further to the stage of court approval and formal implementation.