Yanlord Plans to Refinance CMBS With Operating Property Loans Backed by Tianjin Asset; Co. Seeks Potential Partner for Singapore UE BizHub Tower Redevelopment

Management of Singapore-listed developer Yanlord Land Group said during investor meetings in Hong Kong this week that it hopes to refinance a commercial mortgage-backed security backed by a Tianjin asset with longer-term operating property loans in the likely scenario holders exercise this year’s put option, said two sources citing management.

The CMBS was issued in 2022 backed by Yanlord’s Tianjin asset and is putable every three years. Yanlord said it is currently negotiating with the CMBS holders, who review their CMBS holdings every three years, sources said citing management, without elaborating on the gist of the discussions or whether the company prefers the loan even if holders conceded not to put. Holders used to be more willing to roll over CMBS, management said, but demand for CMBS has decreased amid market downturn.

Management is hoping to refinance the CMBS with operating property loans, which typically have longer tenors between 10 and 15 years, secured by the Tianjin asset.

Yanlord management wasn’t clear on the size of CMBS referred to on the call. The company issued CNY 1.215 billion CMBS in June 2022 backed by assets in its Tianjin Riverside Plaza Phase II project, according to data compiled by Octus.

Despite the lower demand for CMBS, management said Yanlord did manage to issue CNY 1.65 billion 4.2% CMBS in 2024 backed by its Yanlord Landmark Plaza in Chengdu, mostly to banks. Proceeds were to refinance an existing loan secured by the project’s three assets – a shopping mall, an apartment building and an office tower. The CMBS was backed only by the apartment building and the office tower; management said it will evaluate future opportunities to seek additional financing backed by the mall asset.

The company also completed a CNY 2 billion 15-year operating loan secured by its Suzhou Cangjie Commercial Plaza to cover the originally CNY 1.5 billion construction loan, management mentioned during 2024 August earnings call.

Yanlord management guided a total of CNY 40 billion valuation for its investment properties portfolio with approximately LTV of 33%. In mainland China, the investment properties are valued around CNY 28 billion, of which CNY 16 billion to CNY 18 billion were encumbered. Its investment properties in Singapore are valued at about CNY 12 billion, of which CNY 8 billion to CNY 9 billion were encumbered.

The company has certain shopping malls and office towers in Shenzhen which are unencumbered, said the sources.

The developer will prefer onshore financing in Mainland China over offshore due to the relatively low borrowing cost onshore, said the sources.

In 2024, the company repaid a CNY 500 million-equivalent offshore loan, a $200 million syndicated loan as well as a $400 million 6.8% offshore bond due 2024, bringing its average borrowing cost down to 4.7% from 5.6% in 2023, said the sources citing the management.

Management told investors that the gross rental income is sufficient to cover its interest expenses, adding that it expects the interest expense to lower to CNY 1.3 billion in 2025 from CNY 1.5 billion last year. The company’s rental income totaled about CNY 1.8 billion in 2024, including CNY 1.4 billion from commercial properties and about CNY 400 million from hotels.

For Yanlord’s projects in Singapore, management noted that it has recognized some revenue from its 25% stake in residential project Leedon Green, a joint venture with Hongkongland’s Singapore unit MCL Land Ltd. although the revenue had not been consolidated into Yanlord’ financials due to the minority stake.

Rental income from Singapore amounted to about CNY 600 million last year, accounting for one third of the company’s total rental income, and the company aims for a 6% growth in Singapore rental income this year.

Regarding news emerged in February about the company listing its 50% stake in Singapore’s UE BizHub Tower, or 79 Anson Road, commercial project for sale, management told investors that it is seeking a potential partner to expand the redevelopment of the building, instead of a direct stake sale, and the local government has approved the construction of a 30% expansion on the project.

For 2025, Yanlord expects its gross profit margin to maintain at about 20% as the company plans to recognize profit on an urban renewal project in Shenzhen this year.

On 2025 cashflow forecasts, Yanlord expects to record CNY 20 billion to CNY 30 billion in sales, CNY 5.5 billion from rental income, CNY 2 billion cash inflows from joint venture projects, while expecting to spend CNY 5 billion to CNY 6 billion on construction costs, CNY 1 billion on sales, general and administrative expenses, CNY 1.5 billion on tax and CNY 3.4 billion on bond repayments.

Below is Yanlord’s capital structure: