(Yicai Global) April 18 -- Chinese real estate developer Times China Holdings has confirmed to Yicai Global that the firm is looking to withdraw from eight urban renovation projects in Guangzhou amid policy changes and dropping sales.

The Guangzhou-based developer is asking the local government to refund the CNY300 million (USD47.1 million) performance bond it paid for three of the eight projects by April 30, according to a document that is circulating online. An executive at the company proved the authenticity of the document to Yicai Global.

The firm has invested a total of CNY1.7 billion (USD268.3 million) in the remaining five projects. Demolition of old buildings is finished but new construction is on hold. Times China is proposing that local state-owned companies should take over these projects.

The government has not yet handled Times China's application, an insider close to the developer said to Yicai Global. Still, the matter is expected to have little effect on the firm's urban renovation business, the person added.

Last August, the Ministry of Housing and Urban-Rural Development clarified municipalities’ urban renewal project requirements, banning large-scale demolition of existing property. Consequently, Guangzhou's administration has started reevaluating such ongoing projects.

Times China is facing cash flow pressures as its sales are decreasing, according to the above-mentioned document. Selling the development rights to the eight projects could help the firm overcome those difficulties.

An analyst said to Yicai Global that Times China is likely looking to cut its investment and capital-related expenditures amid the long-term downturn in the realty market.

The policy adjustments have slowed down or even halted some of the eight projects, said an insider familiar with renovation in the southern city. But it is uncertain how much Times China can recover from its earlier investment and furthermore, the fix is not instant as such money would be paid in installments, the person added.

Last year, the developer that focuses on projects in the Guangdong-Hong Kong-Macao Greater Bay Area earned CNY95.6 billion (USD15 billion) in sales, a 5 percent decline from 2020, while failing to reach the annual target of CNY110 billion.

But Times China's financial health could be worse. As of Dec. 31, 2021, the firm had CNY20.7 billion (USD3.2 billion) in cash so even though the number was declining by 46 percent from a year ago the company was technically still able to cover its short-term debts of about CNY11 billion expected to mature in 2021.

Times China has repaid CNY2.5 billion (USD392.5 million) in debts so far this year. The remainder that is expected to mature in 2022 is about CNY8.5 billion. Within that figure are two US dollar bonds worth USD340 million in total and expiring this month. Since mid-March, the bond prices have risen so investors appear confident about the firm's ability to repay the notes, according to market data.

However, Times China's credit ratings have been lowered. Moody’s downgraded the firm's Corporate Family Rating to B2 from B1 early this month due to the company's predicted sales contraction in the following 12 to 18 months. The developer's senior unsecured notes were moved to B3 from B2 and its related rating outlook was deemed 'negative'.

In the first quarter, Times China reported a more than 30 percent decline in sales to CNY14.2 billion from a year ago.

Editor: Tang Shihua, Emmi Laine, Xiao Yi