Two Chinese Developers Delay Dividends Amid Payment Pressure

(Bloomberg) -- Two Chinese real estate firms are delaying interim dividend payments by months, the latest step by companies in a sector facing mounting bills and limited fund raising options.

Zhongliang Holdings Group Co. and DaFa Properties Group Ltd. both said in Hong Kong stock exchange filings dated Tuesday that the payments were being pushed back to preserve cash.

Shanghai-based Zhongliang, ranked as China's 26th biggest builder by contracted sales according to China Real Estate Information Corp., said that its interim dividend expected Jan. 25 will be paid around the end of August instead. Zhongliang would need to pay about HK$659 million ($84.6 million), according to Bloomberg calculations based on company filings.

“Given the continued uncertainty of the Chinese real estate sector, the group believes that it is prudent, conservative and responsible to preserve more cash to maintain liquidity,” said Zhongliang in its filing, citing “adverse market conditions.”

DaFa, ranked 82nd by CRIC, said that its interim payment expected Wednesday will now be paid around April 6. The payment would amount to about 39.7 million yuan ($6.2 million), according to Bloomberg calculations.

China's property sector saw a record amount of defaults in 2021, amid a liquidity crisis sparked by a government crackdown on excessive borrowing by builders and housing market speculation. Elevated yields have effectively shut the offshore dollar bond market to many builders amid the sector's financial struggles.

Zhongliang and DaFa respectively have $232.1 million and $215.9 million of dollar-bond interest payments and maturities to meet this month, according to data compiled by Bloomberg.

A number of developers have been scrambling for ways to raise funds. The industry will need to find at least $197 billion in January alone to cover maturing bonds, coupons, trust products and deferred wages to millions of migrant workers.