The main units of two China real estate developers, Shimao and China SCE Property, failed to make trust payments of 225 million on due time. The missed payments added to a series of defaults that Chinese developers have faced.
Bloomberg reported that Xiamen Zhongjun, a unit of SCE Property, was unable to repay its 50% share of a trust product that was due at the end of September.
A court has frozen the bank accounts of Xiamen Zhongjun and Shanghai Shimao Jianshe after the issuer Everbright Trust Co sued them, seeking to seize their assets.
SCE Property was the latest victim of China’s ongoing property crisis that has crippled multiple developers this year.
The world’s most indebted firm, Evergrande, failed to release the debt restructuring proposal of its 300 billion dollars in late July. Its headquarters buildings in Hong Kong were seized by lenders in September.
As the liquidity crunch hit the sector, many developers failed to deliver projects on time to homebuyers, leading to nationwide boycotts in late June.
Under boycott pressure, developers pledged to resume construction work on suspended residential projects. However, last week Caixin reported that some property developers in the city of Zhengzhou pretended to restart construction on stalled projects because they did not have enough funds.
The latest data shows that new home sales by floor area during the week-long National day break dropped nearly 40% from a year ago in China’s 20 major cities.According to Bloomberg, defaults on property-linked funds amounted to $7.8 billion in the first half of 2022 and accounted for 82% of total defaults.