Multiple distressed real estate companies "turning losses into profits" | Real Estate Trend Watch

Recently, a number of distressed real estate developers have released their 2025 performance forecasts one after another, and turned from loss to profit through debt restructuring. Even after excluding the impact of restructuring gains, these developers’ operating performance has not yet turned around. However, industry insiders believe that the financial statements’ turnaround still sends positive signals. To truly restore their “cash-generating” ability and achieve sustainable operations, companies still need to take practical steps.

Recently, Country Garden released an inside announcement and a profit forecast. In the announcement, Country Garden said it achieved a turnaround from loss to profit. It expects to record net profit of approximately RMB 1.0 billion to RMB 2.2 billion in 2025, while it recorded a loss of approximately RMB 35.145 billion in the same period of 2024. Jiazhao Group released its 2025 full-year profit forecast, expecting to record a parent-attributable net profit of no less than RMB 50.0 billion in 2025, turning from loss to profit compared with the loss of RMB 28.5 billion in the same period of 2024. Fantasia also stated in its announcement that it expects the company to turn from loss to profit in 2025, with parent-attributable net profit of RMB 17.0 billion to RMB 19.0 billion, versus a loss of RMB 7.076 billion in the same period last year. Regarding its turnaround, Fantasia explained that it was mainly due to the gains generated by its offshore debt restructuring completed in 2025, of approximately RMB 40.0 billion.

Behind these developers’ “turnaround from loss to profit” is the “contribution” of debt restructuring. Taking Country Garden as an example, earlier, all nine onshore debt restructuring plans with a total contracted scale of about RMB 13.77 billion were approved. The offshore debt restructuring plans involving a total scale of approximately USD 17.7 billion also became effective on December 30, 2025. Overall, the estimated reduction in total debt is close to RMB 90.0 billion. After the restructuring, the new debt financing cost has dropped sharply to 1% to 2.5%, giving Country Garden a critical window to shed burdens and move forward with a lighter load over the next five years.

Liu Shui, General Director of Corporate Research at China Index Academy, said that during debt restructuring, the difference generated when the book value of restructured debt exceeds the cash for settlement, the fair value of non-cash assets, or the book value of the restructured debt after restructuring must be recorded in full as profit or loss for the current period, forming a “debt restructuring gain.” According to these companies’ performance forecasts, their turnaround from loss to profit is mainly due to gains from debt restructuring. After excluding debt restructuring gains, they are still in losses.

On the operational front, these developers will still face pressure in the short term. Liu Shui emphasized that completing debt restructuring does not mean the company has truly “gotten out.” If subsequent sales are not smooth and operations cannot be improved, there is still a risk of cash flow breaking again. Therefore, companies must treat debt restructuring as a new starting point rather than an endpoint. This measure mainly addresses short-term liquidity risk and buys valuable time to repair the balance sheet. But to truly restore cash-generating ability and achieve sustainable operations, companies still need to take concrete steps. The core task is to accelerate collections from sales and unlock existing inventories and assets. Companies also need to adjust their business structure, focus on core advantageous businesses, strengthen refined management, and shift toward a development model that places greater emphasis on asset quality, stable operations, and financial security. In addition, the company’s own efforts also need to be supported by improvements in the external environment.

A review by the reporter found that distressed real estate developers are all seeking a way out, and most have chosen to start with light-asset business. Recently, the “Digital New Shore · HarmonyOS Sailing” opening ceremony and industrial innovation launch event for HarmonyOS in Guangzhou’s Baiyun District was held. Country Garden, as one of the first batch of core partners for smart, whole-area ecology, officially signed an ecological cooperation framework agreement with Baiyun District’s government services and data management bureau. It is understood that Country Garden will integrate key resources and capabilities from its business segments under management, construction management, architectural technology, property services, and more, and deeply participate in Baiyun District’s “Smart City” development blueprint.

Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, said that the “turnaround from loss to profit on paper” of distressed real estate developers is only bleeding control at the financial level. True rebirth requires completing three levels of transition: from accounting repair to operational repair, and achieving positive operating cash flow as soon as possible; from debt restructuring to business model reconstruction, bidding farewell to high leverage and high turnover, and building a sustainable business model featuring light assets and strong operations; from guaranteeing project delivery to guaranteeing credit, rebuilding market trust, and restoring normal financing and sales capabilities.