China Evergrande Says Construction Has | Stock Market News Today


Troubled property developer

China Evergrande Group


EGRNF -10.55%

said construction work has resumed at more than 90% of its stalled residential projects, adding that it has picked up the pace of delivering apartments promised to home buyers across the country.

Evergrande,


EGRNF -10.55%

in a statement Sunday night, said more than 80% of its suppliers of materials and decorative services have “resumed cooperation,” and that it has signed thousands of new contracts with various suppliers. At the end of August, the developer disclosed that construction had been suspended at some projects after it fell behind on payments. And by October, hundreds of Evergrande’s unfinished developments were affected by work stoppages.

With just a few days to go before the end of 2021, Evergrande said it intends to deliver 39,000 homes in 115 projects to buyers across China in December. It compared that to its completion of fewer than 10,000 units in each of the preceding three months.

The world’s most indebted real-estate firm Evergrande has embarked on a social media campaign to show construction has resumed and says it’s doing whatever it takes to deliver homes. WSJ compares these posts with ones from upset buyers. Photo Composite: Emily Siu

In a post on social media Monday, Evergrande said apartment projects have been handed over in batches in 18 provinces and it released photos of completed buildings adorned with bright red decorations and people signing papers to take ownership of their homes.

Despite this, Evergrande still has many more commitments to fulfill and its debt crisis remains unresolved. The 25-year-old developer used to be one of the country’s largest by contracted sales and is on the hook to deliver units to more than one million people. Many buyers made large down payments on unfinished flats, expecting to take ownership of them in a few years.

Hui Ka Yan,

Evergrande’s founder and chairman, said that “under the care and guidance of governments at all levels,” as well as support from partners, financial institutions and other constituents, the developer has made progress in its commitments to homeowners.

He added that Evergrande would do whatever it takes to resume work and deliver homes and predicted that the firm will eventually be able to “resume sales, resume operations, and pay off debts.”

Hui Ka Yan, China Evergrande’s chairman, in Hong Kong in 2019.



Photo:

Paul Yeung/Bloomberg News

The company’s statement followed comments over the weekend from two Chinese regulators which said they would safeguard the rights of homeowners and keep the property sector stable. Beijing has been trying to prevent Evergrande’s debt crisis from hurting the many small businesses and ordinary citizens that the developer owes money and apartments to.

Wang Menghui,

head of China’s Ministry of Housing and Urban-Rural Development, said in an interview with the state-run Xinhua News Agency that the regulator will address the risks of some leading developers that fail to deliver projects on time, with the goal of “guaranteeing home deliveries, protecting people’s livelihoods and maintaining social stability.”

The People’s Bank of China separately said—as part of a wide-ranging statement on the economy—that it would protect the rights and interests of homeowners and promote the healthy development of the country’s real-estate market.

Evergrande, the world’s most indebted developer, has been struggling under the weight of roughly $300 billion in liabilities, including around $20 billion in international bonds. The developer has missed payment deadlines on some of its dollar bonds, setting the stage for a massive and complex restructuring. Major credit raters have declared it to be in default.

Earlier this month, the conglomerate sought help from the government of its home province, Guangdong. It has since set up a risk-management committee that includes representatives from several state-backed entities.

Evergrande recently said the committee is working to help contain its risks and will engage with its creditors. Some international bondholders, however, have said there has been little communication from the company so far, the Journal reported last week.

The company’s Hong Kong-listed shares have plunged in value this year to historic lows and its dollar bonds are trading at deeply distressed levels. Markets in Hong Kong were closed Monday for a public holiday.

Write to Anniek Bao at [email protected]

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PE-Backed Hospital Chain Got Help From Major Landlord as Losses | Sidnaz Blog


Medical Properties Trust Inc.


MPW -1.44%

is a little-known real-estate investor that helps private-equity firms cash in on their hospital investments. Recent financial documents provide fresh details on the close relationship and deal-making between the firm and its biggest tenant.

The documents show Medical Properties Trust’s exposure to Dallas-based Steward Health Care, a hospital chain until last year controlled by Cerberus Capital Management LP. When Steward ran into financial trouble, Medical Properties Trust provided it more than $700 million through a series of complex deals, the documents show. It provided $200 million to buy Steward assets valued at $27 million. Then it refinanced debts Steward owed Cerberus.

The documents give a window into the finances of a company at the heart of private equity’s push into healthcare in recent years. They show how the financial turbulence at these firms can have ripple effects elsewhere in the financial system.

Steward accounted for 30% of Medical Properties Trust’s revenue last year. Steward lost more than $400 million in 2020 and reported nearly $1 billion of unpaid supplier expenses and other bills, the documents show. The company also faces audits by the Internal Revenue Service and state authorities.

Medical Properties Trust says it is one of the world’s largest nongovernmental hospital owners, with more than 400 properties world-wide and assets of nearly $19 billion. Steward is a large for-profit operator, with 34 hospitals nationally and more than $5 billion of revenue last year.

The property of this hospital in Riverton, Wyo., was sold to Medical Properties Trust.



Photo:

Cayla Nimmo for The Wall Street Journal

Steward said in response to questions that it was “on solid financial footing.” It attributed a rise in accounts payable to a surge of Covid-19 cases late last year and information-technology investments the company had made. It declined to comment on the audits, as did the IRS.

Medical Properties Trust has publicly described some of the recent deal-making as an effort to align itself with Steward’s strategy and take advantage of its potential growth. Cerberus declined to comment for this article.

The hospital landlord has previously received written inquiries from the Securities and Exchange Commission, including about its relationship with Steward. As a private company, Steward doesn’t have to publish its financial results. Medical Properties Trust filed Steward’s financials with the SEC last week because it said the information might be relevant to investors.

The SEC declined to comment.

The close relationship between Steward and Medical Properties Trust is partly a result of deal making by Cerberus. Under the private-equity firm’s control, Steward sold significant hospital real estate to Medical Properties Trust, which in turn leased the real estate back to Steward. Medical Properties Trust also has a roughly 10% stake in Steward, documents show.

Steward, like many hospital operators, struggled in the pandemic and says it received more than $400 million in government relief last year. The company says it lost more than $400 million last year, compared with an $82 million net profit in 2019.

While company financial statements show it had around $400 million of cash and equivalents at the end of last year, its short-term liabilities significantly exceeded its current assets.

Medical Properties Trust operates in a niche of real-estate investing. It buys hospital real estate—the physical buildings and land—and then leases it back to the companies that run the hospitals. Many of its deals have been with private-equity firms, which can use the cash from the sales to lock in profits or pay down debt incurred in the takeover of hospital operators. The playbook turns hospitals into renters of property they previously owned.

Rhode Island officials recently restricted the owners of two hospitals from doing sale-leaseback transactions to raise funds. The ruling stemmed from a state probe of hospital chain Prospect Medical Holdings Inc., which until recently was backed by Leonard Green & Partners LP.

Prospect had earlier used proceeds from real-estate sales to Medical Properties Trust to pay down debt, including money borrowed to fund hundreds of millions of dollars in dividends.

Rhode Island officials, including Attorney General Peter Neronha, recently restricted the owners of two hospitals from doing sale-leaseback transactions.



Photo:

David DelPoio/Providence Journal/Reuters

“We’d all rather own our home than rent it or lease it. Why? Because there’s value in it. There’s value in it I can use on a rainy day to raise capital,” said

Peter Neronha,

Rhode Island’s attorney general.

Prospect declined to comment.

In Wyoming, hospital operator LifePoint Health Inc. sold the property of a small city’s only hospital to Medical Properties Trust. The community is trying to build a new nonprofit hospital to displace LifePoint. The hospital operator, owned by

Apollo Global Management Inc.,

has said a new hospital would duplicate services it is already offering. Apollo has declined to comment.

Michael Carroll, who covers Medical Properties Trust for RBC Capital Markets, said the firm has achieved strong returns in recent years, in part by doing debt and equity deals to support its tenants.

“They do have a flexibility to solve their operators’ problems,” he said.

Steward sought government cash as the pandemic hit, threatening to close a hospital in Easton, Pa., unless it received $40 million in cash to keep its doors open.

The Easton Hospital was ultimately saved after a nonprofit operator agreed to buy it from Steward. Cerberus has said it is happy the Easton community’s needs were met.

As losses mounted, Medical Properties Trust proved to be a key source of cash for Steward, financial filings show. In 2017, Steward acquired two hospitals in Utah as part of a broader transaction involving Medical Properties Trust. Under the deal, Medical Properties Trust issued Steward roughly $700 million of mortgages for the properties.

Steward Health Care ended up selling Easton Hospital in Pennsylvania.



Photo:

Kevin Hagen for The Wall Street Journal

Then, in July 2020, Medical Properties Trust agreed to acquire the Utah properties from Steward. Under the deal, Medical Properties Trust erased Steward’s mortgages and paid Steward an extra $200 million for what Medical Properties Trust said was the real estate’s “relative fair value.” Steward leased the properties back from Medical Properties Trust in exchange.

“All of our sale-leaseback transactions are subject to independent valuation and analysis,” Steward said.

Cerberus sold its 90% stake in Steward last year to a management group led by Chief Executive Officer

Ralph de la Torre

in exchange for a note from Cerberus, Steward said at the time.

In January, Medical Properties Trust stepped in to provide Steward a new $335 million loan that it said would extinguish the debt Steward owed Cerberus. Medical Properties Trust’s chief financial officer told analysts that the loan would be “nominally profitable.”

“The goal of the investment is not necessarily to earn a high-profit interest rate,” he said, but the deal would help better align Medical Properties Trust with Steward’s growth.

Steward declined to disclose loan terms but said the deal allowed it to sever ties to Cerberus.

The most complex deal involved Steward’s international business, which had been running hospitals on the island nation of Malta. Under the deal, Medical Properties Trust formed a new joint venture with Dr. de la Torre and other executives that is separate from Steward.

Medical Properties Trust then agreed to provide financing. It lent the joint venture $205 million so it could acquire the international assets from Steward. The hospital company’s financial statements said the assets sold were worth $27 million.

Asked about the price tag on an analyst call, Medical Properties Trust CEO

Edward K. Aldag Jr.

said it reflected work done by Dr. de la Torre’s team to secure opportunities for a venture in Colombia. “They put an awful lot of time and effort and infrastructure in place,” he said.

Steward said the price for the assets was fair and determined by arm’s length negotiations.

Despite the losses and government financial support, Steward said it returned cash to owners of the business this year. Steward said the payment wasn’t a dividend but a return of shareholder capital. The total payout likely totaled more than $100 million.

Write to Brian Spegele at [email protected] and Laura Cooper at [email protected]

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Ant Wins China’s Approval to Set Up Consumer-Finance Company | Sidnaz Blog


Ant Group’s headquarters in Hangzhou, China.



Photo:

Qilai Shen/Bloomberg News

China’s banking and insurance regulator said Thursday that it had approved Ant Group’s application to set up a consumer-finance company, the first regulatory milestone in the fintech giant’s restructuring of its business.

Ant will hold a 50% stake in the new entity, registered in the southwestern municipality of Chongqing, with the rest held by six other shareholders. The company, Chongqing Ant Consumer Finance Co., is licensed to conduct consumer lending and other operations.

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Latest News Today – India’s economy contracts -7.3% in fiscal 2021, worst


The fourth quarter numbers recorded a growth of 1.6 per cent.

Recording its worst ever performance in over four decades, India clocked a negative growth of 7.3 per cent for 2020-21 while the fourth quarter of the fiscal showed a meagre rise of 1.6 per cent. The GDP numbers released by the National Statistical Office (NSO) on Monday, reflect the delicate state of the nation’s economy and is all the more glaring since the Centre had begun the ‘Unlock’ process from July 2020 onwards after imposing a nation-wide lockdown in March 2020, which had lasted till June 2020.

The fourth quarter numbers are all the more poor as during the January-March period, all sectors had been completely opened and the situation was near normal, yet a 1.6 per cent growth during the fourth quarter of FY21 shows all is not well with the fiscal health of the nation.

“Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in the year 2020-21 is now estimated to attain a level of Rs 135.13 lakh crore, as against the First Revised Estimate of GDP for the year 2019-20 of Rs 145.69 lakh crore, released on 29th January 2021. The growth in GDP during 2020-21 is estimated at -7.3 percent as compared to 4.0 percent in 2019-20,” Ministry of Statistics & Programme Implementation said in a press release.

In 2019-20, the GDP had shown a poor growth of four per cent, an 11-year low, mainly due to contraction in secondary sectors like manufacturing and construction.

During the first quarter of 2020-21, India’s GDP had shrunk by 24.38 per cent, hit mainly by the Covid-19 pandemic.

The Central Statistics Office (CSO) released the GDP numbers for January-March quarter and financial year 2020-21 on Monday evening.

Hit by the pandemic and the nationwide lockdown imposed to curb the spread of infections last year, India’s economy had contracted during the first half of FY21, before returning to positive territory in October-December quarter with a growth of 0.4 per cent. In April-June, the economy had shrunk by 24.38 per cent, which improved to 7.5 per cent contraction in July-September.

The CSO had projected 8 per cent GDP contraction in FY21, implying a contraction of 1.1 per cent in March quarter. Meanwhile, the Reserve Bank of India had projected a 7.5 per cent contraction for FY21. However, most of the analysts had expected the economy to bounce back at a better-than-expected pace in March quarter, and predicted that the FY21 contraction would be less than CSO’s projection of 8 per cent.

According to a SBI research report, India’s GDP was likely to expand by 1.3 per cent in January-March quarter, thus leading to a less-than-expected 7.3 per cent contraction during FY21.



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