Behind the Collective Profitability of Risk-Exposed Real Estate Companies' Financial Reports: Fake Profits and Real Losses, Trading Time for Space

Questioning AI · Why is debt restructuring profitability accused of being fictitious profit with real losses?

As the annual report window opens, major real estate companies are gradually releasing their 2025 performance reports. Under the push of debt restructuring, four property developers—Country Garden, CIFI Holdings, Kaisa Group, and Oceanwide Group—have achieved a turnaround from loss to profit, with total net profit attributable to the parent exceeding 80 billion yuan. Although this profit mainly stems from unrealized gains due to reductions in debt book value and has not resulted in genuine cash inflows, for distressed property firms, shedding massive debt burdens is a crucial milestone achievement. CIFI Holdings’ unpaid debt in 2025 dropped to 50.4 billion yuan, a decrease of over 36 billion yuan from the previous year; Country Garden’s interest-bearing liabilities decreased by 42% year-on-year to 1.48 trillion yuan. Industry insiders point out that the so-called performance reversal is essentially “buying time with space,” delaying short-term debt repayment pressures. For these companies, the real challenge lies in whether subsequent operations can return to normal—steadily advancing project delivery, restoring business capacity, and orderly repaying existing debts are key to achieving sustainable and steady development.

Debt restructuring as a safety net, four property developers together profit over 80 billion yuan

As property companies continue to disclose their 2025 financial reports, many that previously faced debt crises have turned losses into profits through debt restructuring, easing their debt burdens.

Oceanwide Group was the first to disclose its 2025 financial report, recording a net profit attributable to the parent of 148B yuan for the year, compared to a loss of 6.76B yuan in the same period of 2024, a year-on-year increase of 136.28%.

Subsequently, Country Garden, Kaisa Group, and CIFI Holdings announced their results, with full-year net profits attributable to the parent of 18.62B yuan, 3.26B yuan, and 52.55B yuan respectively, representing increases of 109.93%, 284.18%, and 349.66% year-on-year.

The combined net profit attributable to the parent for these four companies in 2025 reached 17.67B yuan. Turning losses into profits has become a common feature among distressed property developers in 2025. The reasons given by these companies are consistent: debt restructuring. CIFI Holdings, Kaisa Group, and Oceanwide Group disclosed in their financial reports that their debt restructuring gains in 2025 were approximately 80.24B yuan, 41.43B yuan, and 85.37B yuan respectively.

Additionally, Country Garden’s offshore debt restructuring of 17.7 billion USD took effect on December 30, 2025; all nine domestic bonds totaling 13.77 billion yuan had their restructuring plans approved.

Liu Shui, Director of Enterprise Research at China Index Academy, stated that in debt restructuring, the difference arises when the book value of restructured debt exceeds the repayment cash, fair value of non-cash assets, or the book value of debt after restructuring. This difference must be recognized as a one-time profit in the current period, forming a “debt restructuring gain.”

Xie Yifeng, President of China Urban Real Estate Research Institute, pointed out that the achievement of net profit turnaround through debt restructuring signals multiple positive signs for the risk mitigation of the real estate industry: it not only provides feasible pathways and models for distressed developers to push forward debt restructuring and resolve existing risks but also offers effective measures for companies to turn losses into profits and promote ongoing operational improvements.

Xie Yifeng said that the current risk mitigation in the real estate sector has gradually entered the final stages. For companies that have successfully restructured their debts, their risk resolution work is nearing completion, and the industry-wide risk cleanup continues to accelerate, showing a steady upward trend.

The benefits of successful restructuring go beyond surface data

Book value repair is only the appearance of debt restructuring. The deeper impact lies in the repair of debt indicators and optimization of debt structure, which gives property developers more time to adjust and space for future operational improvements.

Country Garden’s total liabilities in 2025 amounted to 46.87B yuan, down from 767.86B yuan in the same period of 2024, a reduction of 984.59B yuan within a year; borrowings decreased from 253.5 billion yuan at the end of 2024 to 148 billion yuan in 2025, a decrease of 105.5 billion yuan, a 42% drop.

Along with the reduction in debt scale, Country Garden also adjusted its debt structure. The financial report shows that at the end of 2025, the amount of loans due within one year was 216.73B yuan, down 107.18B yuan from the same period in 2024, reducing short-term repayment pressure.

Short-term debt reduction is not without cause: some debts are directly written off through restructuring, while others are deferred for repayment later. The financial report indicates that the debt due after five years for Country Garden increased from zero in 2024 to 30.23B yuan in 2025.

Several distressed developers adopted similar approaches. CIFI Holdings’ short-term bank and other borrowings, senior notes, corporate bonds, medium-term notes, and convertible bonds totaling 14.29 billion yuan in 2025 decreased by 77.68% year-on-year. Meanwhile, the amounts due within one year increased from 1.41B yuan at the end of 2024 to 36.15 billion yuan.

Xie Yifeng noted that the significant reduction in short-term debt scales for property developers creates conditions for “buying time and space” in operational recovery. It helps repair the balance sheet, stabilize cash flow, and provides a buffer for restoring operational cash-generating capacity, effectively extending the cycle of recovery and leaving room for strategic adjustments and business restoration.

From project delivery to self-sustaining growth

The “structural upgrade” of property developers’ finances is essentially about buying time—delaying short-term debt pressures into the future. While it does not completely eliminate debt, it grants developers more time to focus on restoring their own cash-generating abilities.

In 2025, major developers will prioritize project delivery as a key to breaking the deadlock. Kaisa Group will deliver 18 projects with about 8,592 units in cities like Shenzhen, Guangzhou, Chengdu, and Chongqing; Country Garden plans to deliver 170k units in 2025, with nearly 1.15 million units delivered from 2023 to 2025; CIFI Holdings will deliver over 22k units in 2025, with an overall delivery rate of 99%; Oceanwide Group (including joint ventures and associates) will deliver over 120k residential units from 2023 to 2025.

Yan Yuejin, Deputy Director of Shanghai E-House Real Estate Research Institute, emphasized that project delivery is a critical link in property company operations. If projects cannot be delivered smoothly, subsequent project operation and cash recovery will lack fundamental support. Delivery is the foundation of sustainable operation; only with delivery can ongoing development be sustainable. The capital market also pays close attention to progress in project delivery, viewing it as a core task of current business operations.

However, from an operational perspective, the core issue remains: how to truly restore self-sustaining growth in 2026. In 2025, Country Garden, CIFI Holdings, Kaisa Group, and Oceanwide Group’s contracted sales were 33.01 billion yuan, 16.1 billion yuan, 23.04B yuan, and 26.31 billion yuan respectively, representing declines of 30.06%, 52.2%, 17.9%, and 25% year-on-year.

Liu Shui suggested that property developers should seize policy windows (such as optimizing purchase restrictions in core cities), enhance product competitiveness, increase marketing efforts, accelerate sales of existing projects, and quickly recoup funds. They should actively utilize policy tools to activate assets, such as using local government special bonds to acquire idle land and existing commercial housing, converting accumulated assets into cash flow; coordinating with government departments on land use adjustments, land swaps, and other policies to recover funds or replace assets with more marketable ones.

Liu Shui analyzed that completing debt restructuring does not mean the company has truly “landed.” If subsequent sales are sluggish and operations do not improve, cash flow risks may reemerge. Debt restructuring should be viewed as a new starting point, not an endpoint. It mainly addresses short-term liquidity risks and buys time to repair the balance sheet. To truly restore “self-sustaining growth” and achieve sustainable operation, further efforts are necessary.

Xie Yifeng believes that current debt restructuring has effectively alleviated short-term debt pressures for property developers. Besides accelerating sales and cash collection, enhancing self-sustaining growth can be achieved through multiple measures: disposing of non-core assets and bad assets promptly, accelerating the monetization of quality assets, actively expanding new financing channels such as commercial real estate REITs and operational property loans to activate assets and supplement cash flow, and relying on stable income sources from holding-type commercial properties and property management sectors to strengthen long-term operational capacity.