2 billion bought 77 hotels, but it became a hot potato. What did R&F do wrong?

Compared with more than a decade ago, the real estate industry as a whole is no longer as prosperous as it used to be. In recent years, Wanda has been "slimmed down", and the news that Evergrande is heavily in debt has cast a "sunset" color over the whole industry. Of course, this is all relative. The so-called lean camel is bigger than the horse, and the market of real estate industry is still huge, but the related enterprises have changed from "singing all the way" to "walking on thin ice".

r&f started in Guangzhou. its rapid development in the past 2 years and its boldness in business decisions reflect its enterprising spirit. one of the most well-known things is that in 217, r&f spent 2 billion yuan to buy more than 7 hotels from Wanda and joined the ranks of the world's largest hotel operators. But now R&F is plagued by declining revenue and high debt.

r&f was in a leading position in the real estate industry in the early days. the real estate sales of r&f group ranked fourth in the industry in 28. after more than ten years, r&f has obviously fallen behind. In 217, sales ranked 23rd, and in 218, it rose slightly, ranking 19th. Obviously, it cannot be compared with the previous glory.

in 22, the evaluation agency gave the list of the top ten housing enterprises according to the brand value. The top three are China Shipping, Vanke and Evergrande, and R&F ranks ninth. In 218, China Resources and Sunac, which are still behind, have surpassed R&F.. How did R&F lose its leading position bit by bit?

since 25, the scale of R&F's real estate sales has been growing slowly. The main reason is that R&F Group focuses on commercial real estate, and R&F has made a forward-looking plan. By taking the new CBD of the city as an opportunity to enter commercial real estate and establish a unique diversified business format, it will lead the industry.

Therefore, the development of R&F in this decade is obviously inconsistent with the progress of the whole real estate industry. At the same time, other peer housing enterprises are vigorously developing residential development and achieving high profits through high turnover. Compared with residential development, the initial investment of commercial real estate development is larger, and the overall process is slower, which directly prolongs the return cycle.

From now on, R&F made a strategic mistake in this decision. Although it was wise after the event, the long period of capital return did make R&F lose its leading position accumulated at first. In addition, R&F didn't master the rhythm in buying land. 25 was the year when R&F went public. It can be said that R&F was full of confidence at this time, just like its name, full of strength.

judging from the overall land holding, R&F's layout is very reasonable, covering major regions, with second-tier cities and third-and fourth-tier cities becoming the focus of operation, and differentiating risks by expanding the scope. China's real estate is a differentiated industry with obvious local differences. A broader business scope is conducive to slowing down the impact of regional market fluctuations, and at the same time, it can effectively grasp the potential cities in different growth periods.

In 26, R&F began to buy land on a large scale. In two years, the scale of land reserve increased to 2 million square meters, which increased R&F's debt, and the arrival of 28 dealt a heavy blow to R&F.. When the financial crisis broke out in 28, the global economy was depressed, and it was also the worst year for China's stock market. The economic downturn led to a 1-point drop in the real estate boom index, which hit a slope in the broken-line statistical chart.

At this time, R&F shouted out that slogan, and it is necessary to survive next year. In 29, when the government rescued the market, R&F was on the rescue boat. In addition, the Panda City invested by R&F in Chengdu in 26 and the 7, square meters of land stored in Shanghai in 27 have not been rewarded, which is considered as a loss-making business. At this time, R&F gradually lost its status as the Five Tigers of South China (Evergrande, Country Garden, Agile and Hesheng)

In 213, R&F's ranking in the industry had dropped to 16th, and Vanke's sales performance was comparable to that of four R&F. R&F began to seek to change the status quo. In 213, R&F purchased land on a large scale for the second time. In that year, it added 2 million square meters of land reserves, focusing on expanding investment in non-first-tier cities. At this time, R&F's net debt ratio also reached 11%. In 213, the state increased the regulation of the second and third tier property markets, and R&F was once again affected, facing severe inventory pressure and almost stagnant growth rate.

afterwards, r&f put forward the strategy of diversification. the landmark event was that in 217, r&f acquired 77 Wanda hotels, including the office building of Dalian Wanda center, with a transaction amount of RMB 18.955 billion. Obviously, R&F wants to reduce the risks and impacts in the real estate sector by developing self-sustaining properties. After acquiring Wanda's hotels, R&F's assets in hotels, shopping malls and office buildings account for nearly one-fifth of the total. This acquisition has further increased R&F's debt ratio.

In fact, R&F's hotel business is also in a loss state. The net loss in 216 was 18 million, and the net loss in 217 was 15 million. After the acquisition in 218, the turnover increased by 1 billion, but it still lost 18 million. In terms of real estate, the real estate policy was slightly relaxed in the first two years, and R&F's sales performance increased, which led to a rebound in profitability. However, due to R&F's high debt, the overall income was not particularly obvious.

r&f's debt ratio has always been at the forefront of its peers, and in the average net debt ratio in the last 1 years, r&f ranked second with 127%. The first place is Evergrande with a debt ratio of 24%, followed by Sunac, Greentown and Poly.

It can also be seen that R&F's business strategy is high reserve and high debt, and the purpose of appreciation is achieved through long-term land reserve. Of course, the phenomenon of "sitting on the ground to start the price" is common in the industry before the real estate development cycle was extended. However, with the regulation of policies, high reserves and high debts may also mean high risks. The debt ratios of Vanke and China Shipping in the industry are much lower, and their management methods are more stable.

In 22, R&F also seems to be aware of the risks, and the annual report points out that R&F will reduce its liabilities in 22. The quickest and easiest way to reduce debt is to sell assets, and R&F has indeed done so. Guangzhou R&F International Airport Logistics Park sold 7% of its rights and interests, earning 6 billion yuan, and the transaction return of Guangzhou office buildings and other properties was nearly 6 billion yuan.

At the same time, Li Silian (Chairman of R&F) also said that assets such as shopping malls, office buildings and hotels will continue to be sold when the price is suitable. In addition, R&F reduced its employees by 4% in 22, partly because of the sold properties.

despite selling so much, R&F's net debt is as high as 13%, and the ratio of unrestricted cash to short debt is .4, which still belongs to a red-file enterprise. Li Silian said that the company has sufficient cash reserves on its books, and it is expected to reduce its debt to below 1% within one year, and withdraw from the "red file" in 222.

In fact, the pressure and challenges R&F faces are still enormous. The prospect of the real estate industry is not clear, and the "red file" of enterprises will only be more limited in terms of policies. R&F's previous measures have not played a very good role, and they still lack foresight in decision-making.