TMTPOST--Following the recent debt default of Xi'an Construction Engineering in August, another financial storm has hit Greenland Holdings, thrusting the real estate giant again into the spotlight.

Last month, Greenland Chairman Zhang Yuliang was subject to restrictions on large amounts of consumption, and now its subsidiary in Xi'an has been ordered to pay an additional 3.9 billion yuan ($540 million) in enforcement actions this month.

According to legal data from Tianyancha, Greenland Group’s Xi'an subsidiary has recently faced three new enforcement orders, amounting to over 3.9 billion yuan. These cases involve loan contract disputes, with the defendants including Greenland Xi'an Economic Development Real Estate and Greenland Xi'an Qisheng Real Estate.

The largest of these involves a loan dispute between Shaanxi Green Construction and Greenland Xi'an, with an enforcement amount of 2.3 billion yuan. Another case targets Greenland Xi'an Qisheng Real Estate, with an amount of 1.55 billion yuan. The two cases involve key Greenland subsidiaries in Shaanxi province.

This latest financial blow comes as Greenland struggles under a debt burden of 930 billion yuan. Amid this crisis, three state-owned construction enterprises associated with Greenland—Xi'an Construction Engineering, Guangxi Construction Engineering, and Tianjin Construction Engineering—have already defaulted on its debts.

Many now fear the “Greenland empire,” once a leading player in China's urban development, may see a downfall coming, with numerous unfinished skyscrapers across the country, including the highly publicized "Greenland Centers."

The latest 3.9 billion yuan enforcement order stems from debts owed to Shaanxi Green Construction, a subsidiary of Shaanxi State-Owned Assets Supervision and Administration Commission (Shaanxi SASAC). Both entities have been close partners in various joint real estate projects. This lawsuit includes Greenland Xi'an High-Speed Rail New City Real Estate and Greenland Xi'an Economic Development Real Estate as key defendants.

Additionally, Greenland Xi'an Qisheng Real Estate has also been named in another enforcement case linked to Shaanxi Green Construction.

The subsidiaries embroiled in these lawsuits are closely tied to major projects involving both the Shaanxi provincial government and Greenland. These projects include the Xixian New Area Airport Exhibition Center, the Greenland PICO International Exhibition Center, the Greenland Energy Financial Trade Center, the China International Silk Road Tower (the tallest building in northwest China), and the "Greenland Heart" High-Speed Rail New City. However, apart from the first two, many of these ventures have been left incomplete, adding to the mounting troubles for Greenland in Xi'an.

These issues can be traced back to the root of Xi'an Construction Engineering’s default in August. On August 19, 2024, the company announced it had failed to repay interest and principal of 263 million yuan on a medium-term note, formally entering default. This came after bondholders agreed to cancel 151 million yuan of bond principal, a portion held by Greenland Holdings.

As of mid-2023, Xi'an Construction Engineering was involved in Greenland projects with contract values totaling 9.661 billion yuan, of which 7.247 billion yuan worth of work had been completed. However, nearly 2.35 billion yuan remained unpaid. The situation has been exacerbated by insufficient cash flow from other real estate projects, with an average recovery rate of just 57%.

With the mounting debt burden and stalled projects, Xi'an Construction Engineering has already been on the brink of collapse. Greenland's troubles in Xi'an, meanwhile, have continued to escalate throughout the year.

In addition to financial difficulties, Greenland Xi'an has also been facing public backlash over cost-cutting measures and delayed wage payments. Other major incidents include homeowners in the Fengdong New City’s Greenland Lanting Mansion taking matters into their own hands to repair roads, and the acquisition of the Greenland Binfenhui commercial center in Xi'an's CBD area by Jinzheng Group.

On September 20, according to Tianyancha, Zhang was barred from high amount of consumption by Wuhan’s Huangpi District Court for failing to comply with a court ruling. On October 9, Xi'an’s Yanta District Court issued a similar consumption restriction order against the legal representative of Greenland Xi'an Real Estate.

Greenland’s financial performance reflects the worsening of its financial troubles. In the first half of this year, Greenland reported revenue of 115.3 billion yuan, a 33.8% decrease year-on-year. The company's net profit attributable to shareholders plunged by 91.97%, falling from 2.61 billion yuan to just 210 million yuan. Total assets stood at 1.07 trillion yuan and total liabilities at 930 billion yuan, representing a high debt-to-asset ratio of 86.63%.

The company also faced sharp declines in property sales, with contract sales dropping by 49.7% year-on-year to 31.837 billion yuan, and sales area decreasing by 49.6% to 2.97 million square meters. Moreover, Greenland did not add any new real estate projects to its pipeline in the first half of the year.

In July, Zhang announced that Greenland had secured 19 white-list financing approvals worth 4.7 billion yuan in the first half of 2024, although actual withdrawals were only 1 billion yuan. The company's financing problems remain unresolved, and whether Greenland can successfully overcome this crisis remains uncertain.

The financial world continues to watch how this real estate giant navigates its debt woes, with further developments to be closely monitored.