Two months after being dismissed, Di Da, the 59-year-old chairman of Tianjin Real Estate Group (hereinafter referred to as Tianfang Group), was officially investigated.

On October 23, according to the news from the Tianjin Commission for Discipline Inspection and Supervision: Di Da, Secretary of the Party Committee and Chairman of Tianjin Real Estate Group Co., Ltd., is suspected of serious violations of discipline and law, and is currently undergoing disciplinary review and supervisory investigation.Caixin had reported the matter as early as a month ago.Caixin reporters learned from various sources that Di Da was taken away in mid-August, and was replaced by Wang Zhenyu, the 48-year-old deputy director of Tianjin State-owned Assets Supervision and Administration Commission.

Di Da has worked in the Tianjin real estate industry as a manager for 20 years and has been at the helm of Tianfang Group for 4 years.According to public information, Di Da was a reporter of Tianjin People's Broadcasting Station in his early years, and then went to Tianjin Institute of Finance and Economics for further study. He worked in the Youth League Committee and library of the school for many years;Deputy general manager, general manager and chairman of Tianjin Real Estate Trust, and later transferred to general manager and chairman of Tianjin Real Estate Development and Operation Group;

In 2014, Tianjin Real Estate Trust Company was merged into the latter, and Tianfang Group was established; Di Da served as the party secretary and chairman of Tianfang Group until he was investigated in mid-August 2018, less than half a year before his retirement.

After Di Da was investigated, almost all the original leadership team of the entire Tianfang Group was replaced, many people were investigated, and some people are still being taken away for investigation.

According to the Caixin reporter’s combing of public information and understanding from various sources, on August 21, Xiong Guangyu, the former general manager of Tianfang Group and the most important subsidiary of Tianfang Development (600322.SH), was dismissed; on August 23Guo Pengpeng, the former deputy director of the market development department of Tianfang Group, and Zhang Yachen, the former deputy general manager of Tianjin Fangxin Construction;

On September 5, Mao Tie, director and general manager of Tianfang Development, was dismissed.On October 23, the day when the news of Di Da’s investigation was officially released, Yang Xinzhe, secretary of the Kaaba Development Board, resigned due to personal reasons.

In addition, Caixin reporter learned from many sources that many of Tianfang Group's business needs to be reported to the people sent by Poly Real Estate, which means that Poly Real Estate is likely to become the taker.In April 2018, Tianfang Group listed and transferred 65% of its equity in Tianjin Property Rights Exchange Center. The market reported that Vanke, Ping An, Country Garden, etc. participated in the news;Investors have basically formed a preliminary consensus.

Why Di Da was investigated

According to Caixin reporter's understanding, Di Da was investigated, one may be involved in the Huang Xingguo case.Since September 2016, some members of the Tianfang Group have been involved in the case of former Tianjin Mayor Huang Xingguo.

In April 2018, Tianfang Group was inspected and reported that the influence of eliminating Huang Xingguo was not effective.A person close to the Tianfang Group told the Caixin reporter: When I used to work overtime and stay up late to make materials, there was often a person standing behind me, and that was Huang Xingguo.Huang Xingguo likes to visit the Kaaba Group at night very much to supervise the work progress.

The second is the engineering quality incident of the Yuecui Mingdi Project (also known as the Yuemeijiang Project) in Hexi District, Tianjin, which was undertaken by Shetianfang.In April 2018, the Tianjin Municipal Construction Committee issued a circular on the handling of the responsible units for the quality problems of the Yuecui Mingdi project, saying that individual buildings in the project had quality problems in which the concrete strength did not meet the design requirements. The project was managed by Tianfang GroupSubsidiary Tianjin Tianfang Dingxin Construction Development Co., Ltd. undertook the construction.

According to public information, the Yuecui Mingdi project covers an area of 80,000 square meters and a construction area of 140,000 square meters.At present, Tianfang Group has decided to demolish and rebuild the 18 main residential buildings that have been completed in this project, and directly demolish them from the 30th floor to the ground floor.

According to a video obtained by a Caixin reporter, Tianfang Group has issued a demolition plan to 500 owners of the project, saying that it will delay the delivery of the houses for about 2 years and 5 months.Some owners protested directly at the scene.

How to resolve the debt crisis

For the new leadership team of Tianfang Group, it is first necessary to resolve the huge debt problem of Tianfang Group, introduce strategic investment, and save performance.

According to the information disclosed by Tianfang Group, as of the end of June 2018, the group had total assets of 202.7 billion yuan, total liabilities of 197.3 billion yuan, and a debt ratio of over 97%.Nearly 60 billion yuan.According to the Caixin reporter, after the new Secretary Wang Zhenyu took office, he also repeatedly emphasized that resolving the debt crisis should be the top priority of work.

According to Tianfang’s bond issuance information, among financial institutions, Bank of Beijing, Bank of China, Bohai Bank, and China CITIC Bank have lent loans to Tianfang Group of 14.2 billion yuan, 10.5 billion yuan, 10.5 billion yuan, and 10 billion yuan respectively; Tianjin Bank, Construction Bank, Industrial Bank loaned 7.5 billion yuan, 7 billion yuan, and 5.3 billion yuan respectively.

It is currently difficult to judge how much of this part will eventually deteriorate into non-performing assets.In addition, Tianfang has a large amount of financing outside the balance sheet. In September alone, Tianfang Development had more than 2 billion yuan in loans due.

Wang Zhenyu requested that at present, the Tianfang Group should not use the cash flow for the time being, and use public construction, commercial, etc. to pay for the project; at the same time, do a good job in stabilizing jobs, ensuring housing and wages for migrant workers.According to the Caixin reporter, Tianfang Group has also withdrawn from some projects in other places.

In fact, as early as around 2015, the revenue of Tianfang Group was declining step by step, and the financing cost was as high as more than 10% at that time.Some market participants analyzed that Tianfang Group had just been merged at that time, and in order to achieve great results, it began to acquire land at high cost, and the expansion was too aggressive.According to the rough statistics of Caixin reporters, Tianfang Group has won nearly 100 billion land plots in Tianjin, Jiangsu, Guangdong and other provinces in the past three years.

Tianfang Group is a representative of the chaos in the primary real estate market in the past two years. It borrowed heavily to speculate in land, which is likely to prop up the land price in Tianjin, so that the land and housing prices have inverted; these land kings have made Tianfang's financial situationDeteriorating quickly.The aforementioned senior bond market investor said.

Some bond market investors also pointed out to Caixin reporters: Actually, the market does not measure Tianfang Group as a real estate company, but as a quasi-urban investment platform.He believes that the development and debt situation of Tianfang Group reflect the credit environment and economic model of Tianjin as a whole.■