China South City Obtains RMB 1.4 Billion Bank Financing and Gains recognition by International Institutions that Further Optimizes Debt Structure  

31 August 2020 - China South City Holdings Limited(South China City or the Group) has recently obtained the approval of a property mortgage loan of RMB 1.4 billion (of which RMB 830 million was a 15-year long-term financing) on the trade centre - Plaza 4 in CSC Shenzhen from a large state-owned commercial bank, giving the best value of the property, which implied the Group’s continuous pace in the optimization of debt structure and financing cost, as well as a recognition on the credit and asset quality of China South City from financial institutions. This was also another major breakthrough in the Group’s financing, after the successful issuance of US$200 million in offshore senior notes in early August this year with a 12x oversubscription.

In December 2019, China South City signed a cooperation agreement with Wanda Group to develop a new generation of Wanda Plaza on the above-mentioned property in CSC Shenzhen with an operation term of 20 years and a total GFA of approximately 305,000 sq.m. Combined with China South City’s multi-industry trade centres, comprehensive commercial elements, e-commerce, logistics and warehousing services, local amenities, etc., the cooperation will greatly enrich the business of China South City. The new generation Wanda Plaza program will effectively increase popularity of CSC Shenzhen, which in turn brings prosperity to the economy and upgrade of the new city of Shenzhen Northeast.

On August 27 2020, Moody's assigned a B2 corporate family rating (CFR) with stable outlook to China South City, which reflects its experience in developing and operating integrated logistics and trade centers in China, its good profitability, growing operations and recurring income. The rating also considers CSC's growing streams of non-development income from its rental, property management, logistics and warehousing services and outlets businesses, many of which are secured by long-term contracts with clients. Moody’s expects these recurring streams of income can moderate the volatility of cash flow from the sales of property development projects. On 12 August, S&P upgraded its long-term issuer credit rating on China South City to “B” from “B-”, and its long-term issuance rating of the Company’s outstanding senior notes unsecured to "B-" from “CCC+”. S&P believes that China South City's transition to a fast-churn business model has been showing some positive results, and will lead to sustainable property sales with stable recurring income to support its leverage improvement. The "stable" outlook also reflects S&P's view that China South City will continue to record modest growth in contracted sales and recurring income with disciplined land acquisitions over the next one to two years.

Meanwhile, several well-known international financial institutions such as HSBC, Nomura, Guotai Junan, etc., have also rated China South City's bonds and stocks with "overweight" and "buy" respectively, based on China South City's steady business growth and its leading business model.

In future, China South City will maintain close cooperation with domestic and offshore financial institutions, continue to improve the debt structure and reduce operating costs, in order to lay a solid foundation for long-term development.

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