Xinyuan Real Estate 1Q16 Earnings Call Notes

Xinyuan Real Estate (XIN) Q1 2016 Results

George Liu

Benefitted from favorable government policies in real estate

“During the first quarter, Xinyuan continued to benefit from favorable government policies in China’s real estate sector, which how support the markets we sell. Our sales also benefited from our choice of projects in the Tier 1 and 2 cities that have favorable economy and population growth trends, and where we have an existing presence and good track record of performance.”

Acquired property in Manhattan

“While the newly acquired project located in midtown Manhattan, our architectural, engineering and marketing teams have already been assembled. The project is currently in the planning and design stage, and will be a mixed use project, which will include some retail space.
As just discussed, our new Manhattan project represents our second land acquisition in New York City, which we announced in January.

Expecting stability from favorable government policies

“As we look ahead to the remaining quarters of 2016, while there still remains uncertainty in the real estate industry, we believe market conditions will be stable in the coming quarter and expect favorable government policies to continue to enjoy additional demand for our projects.”

Land prices 40000 RMB per square meter in Beijing

“Kunshan in Beijing as you can see from our announcement that land acquisition cost per square meter construction area, we’re talking about roughly RMB11,000 per square. However, neighborhood the land, the property – the residential property has been so and roughly RMB40,000 per square meter and any new land lots that in option being pushed up a rather neighborhood and probably would be started in RMB30,000 to RMB35,000 per square meter.”

Company has 13% cost of debt in the US, but 7-7.5% in China

“Yes, again as I just mentioned that the rate is about 13% U.S. dollar bond is definitely something which we are taken serious condition – calculation and they have many ways we’re doing. In off shore bond we can get and a cost like 8% or 9% is also a good way to reprice that.
And for the onshore bonds, apart from the 7% or 7.5% financing cost that we have on the current onshore bonds, if we can continue to get those money at a reasonable financing cost by below 8%. It might be – we might consider to repricing to use that to replace cost loans that we are paying across higher than 8%.