XINYUAN Property Management Services Limited (01895.HK, "XINYUAN PM") announced on November 25 that it has entered into three asset-for-debt agreements and one leasing agreement with several subsidiaries of its controlling shareholder, XINYUAN Real Estate. The deals involve accepting physical assets such as parking spaces and commercial villas to offset approximately 134 million yuan in related-party debt.

The debt restructuring traces back to a seven-year-old unsettled payment. According to the disclosure, the prepayment involved dates to 2018 when XINYUAN PM purchased 342 property units in the XINYUAN Mingcheng project. However, the units were seized by a third-party lender, leaving the payment unresolved.

The restructuring involves three key arrangements: 1. **Agreement 1**: XINYUAN PM will receive 2,362 parking spaces and 26 storage rooms across projects in Dalian, Tianjin, Chengdu, and Zhengzhou, valued at 89.07 million yuan. 2. **Agreement 2**: Seven commercial villas in Qingdao’s Lingshanwan Hexie project, covering 1,460.2 square meters, valued at 41.07 million yuan. 3. **Agreement 3**: 121 units in Zhengzhou’s Hangmei International Smart Park, valued at 3.76 million yuan.

Additionally, a 20-year leasing agreement covers 72 parking spaces in Tianjin’s XINYUAN Tangquan Shijia project, with total rent of 2.18 million yuan to be offset against receivables.

XINYUAN PM stated that all assets were independently appraised to ensure fairness and protect shareholder interests. Market analysts note that the transactions, classified as major and connected under listing rules, require shareholder approval due to their scale and related-party nature.

The move reflects broader challenges in the property management sector amid real estate market adjustments. While asset-for-debt deals help mitigate receivable risks, the illiquidity and operational costs of such assets pose long-term challenges.

XINYUAN PM plans to optimize these assets through leasing, sales, and professional management to enhance returns. However, analysts caution that the actual market value of these assets remains uncertain amid a declining property market.

Short-term financial relief aside, the success of this restructuring hinges on XINYUAN PM’s ability to convert these assets into sustainable revenue streams.