Sunac China: Rapid Growth Through Debt-financed Acquisitions

Founded in 2003, Hong Kong-listed Sunac China Holdings Ltd. has achieved meteoric growth over the past decade to become one of the country’s largest residential property developers. The company rapidly expanded in an era when a diminished supply of attractive properties, rising project development costs, and intense competition with existing developers, stacked the odds against the birth of new real estate giants. But Sunac grew by eschewing the standard real estate growth model of taking out large bank loans to fund pricey plot purchases at city auctions. Instead, Sunac focused on acquiring projects through secondary channels using debt financing raised in the capital markets. The strategy paid off. Sunac amassed a national land bank at below market prices in cities where home price appreciation continues to promise major potential gains. (This report in Chinese.)