CIFI Holdings (Group) Co. Ltd. (00884) has released additional information on its recent disposal of a 50% equity interest in a target company connected to the Luoyang Project. The Luoyang Project comprises two residential phases with a total salable area of approximately 197,020 square meters. The first phase, offering around 103,262 square meters of salable area, has recorded a sales rate of about 68% since pre-sales began in December 2021, and the completed units designated for guaranteed delivery have been handed over. The second phase, with a salable area of around 93,758 square meters, has neither commenced presales nor construction.

According to the announcement, the disposal enables CIFI Holdings to receive approximately RMB96.88 million in positive liquid cashflow, net of a RMB8.06 million set-off. The group expects to avoid at least RMB150.00 million in additional capital contributions that would otherwise be required to support the project’s second phase. While the transaction is expected to result in a loss of around RMB141.93 million, the company considers it a prudent strategy amid the continued real estate downturn, especially in lower-tier Chinese cities.

CIFI Holdings highlights that the chosen buyer, which already holds a 50% stake in the target company, settled the transaction in cash and accepted a set-off arrangement. Regulatory requirements for guaranteed delivery projects also mandate that pre-sales proceeds be placed in supervised accounts until properties are delivered to end purchasers. The disposal does not constitute a connected transaction under the Listing Rules, as the buyer is not classified as a connected person of CIFI Holdings.