For POWERLONG CM, the change in controlling stake may not be an endpoint, but rather a new beginning.

On October 13, POWERLONG CM (09909.HK) issued an announcement revealing a core element in parent company Powerlong Real Estate's debt restructuring - up to 32.4% of its POWERLONG CM shares may be transferred or pledged.

The announcement disclosed that Powerlong Real Estate signed an overseas debt restructuring support agreement on October 10. The restructuring consideration includes either selling or pledging POWERLONG CM shares to raise USD 40 million in cash, or transferring no more than 32.4% of shares to creditors. If the latter option is chosen, Powerlong Real Estate's shareholding would plummet from 63% to 30.6%, meaning this commercial management company could change hands.

As of the announcement date, Powerlong Real Estate holds 405 million shares of POWERLONG CM through wholly-owned subsidiaries, representing 63% of total share capital. Although the announcement emphasized that "the restructuring will not adversely affect operations," the capital market responded with a single-day surge of 16.59%, reflecting expectations of breaking free from the parent company's burden after the equity restructuring. Behind this potential change in control lies the crushing crisis of Powerlong Real Estate's RMB 27.598 billion current liabilities and the harsh reality of over RMB 20 billion funding gap.

When real estate developers' debt repayment pressure extends to their highest-quality commercial operation segments, industry asset divestiture has entered deep waters.

**Mother Company's Debt Crisis Forces Control Structure Reconstruction**

The potential change in POWERLONG CM's controlling stake is essentially the inevitable result of the controlling shareholder's debt crisis transmitting to core assets. According to the announcement, Powerlong Real Estate's overseas debt restructuring plan offers two paths: selling or pledging POWERLONG CM shares to raise USD 40 million in cash, or transferring no more than 32.4% of shares for debt settlement.

A senior property analyst pointed out: "This year marks the peak period for real estate developers' debt repayment pressure. When sales proceeds, asset disposals, and financing channels are successively blocked, selling quality subsidiary stakes becomes an unavoidable choice."

Powerlong Real Estate's debt pressure is evident. As of June 30, 2025, its total borrowings were approximately RMB 56.111 billion, with current liabilities reaching RMB 27.598 billion, while cash on hand was only RMB 7.327 billion, creating a funding gap exceeding RMB 20 billion. More severely, the company has accumulated approximately RMB 22.843 billion in defaulted or cross-defaulted debt. The February overseas debt restructuring plan had previously failed due to lack of agreement, triggering a chain reaction of creditors applying for liquidation of wholly-owned subsidiaries.

Blocked asset disposals and collapsed sales have sealed off other survival channels for Powerlong Real Estate. Previous attempts to sell assets like Shanghai Baoshan office buildings to recover funds failed multiple times due to the commercial real estate market downturn. The Fuzhou Yongtai Powerlong Plaza plot was reclaimed by the government, the Guangzhou Xiaogang Powerlong City project plot returned to the land market, and multiple Nanjing projects have been suspended long-term. On the residential sales front, contract sales in the first half of 2025 were only RMB 3.723 billion, halved from the same period last year, with traditional cash-generating functions severely atrophied.

Against this backdrop, POWERLONG CM has become the controlling shareholder's most valuable realizable asset. A person close to POWERLONG CM frankly stated: "Creditors also understand that accepting equity compensation from well-operated commercial assets is far superior to the less than 20% recovery rate under bankruptcy liquidation." POWERLONG CM's 91.8% occupancy rate and RMB 4.285 billion cash reserves make it hard currency in negotiations. This person further noted: "USD 40 million in cash is a drop in the bucket compared to Powerlong Real Estate's RMB 163.6 billion total liabilities; equity transfer is the core of restructuring."

If Powerlong Real Estate chooses to transfer 32.4% of shares, its shareholding would drop to 30.6%, losing controlling status. Potential acquirers likely include long-term funds such as insurance companies and industry peers with commercial operation capabilities. There are precedents in the industry. In 2024, among commercial projects sold by Vanke and Wanda, insurance institutions have become major buyers, as such funds favor assets with stable cash flows.

**Change in Control Could Be Double-Edged Sword**

POWERLONG CM's possible change of ownership reflects the commercial real estate industry's transition from scale expansion to asset restructuring. Since 2025, the industry has shown clear structural changes: on one hand, developer bailouts have spawned a wave of quality asset transactions; on the other hand, operational capability has replaced asset scale as core competitive advantage.

A senior property analyst believes: "Current commercial asset transactions are fundamentally different from those in 2023. Previously it was fire sales of inferior assets; now even flagship projects like Wanda Plaza and Qibao Vanke Plaza are entering the market, indicating debt pressure has transmitted to core assets." Nationwide bulk commercial asset transactions reached 80 deals in 2024, up 57% year-on-year, but transaction logic has shifted from "scale premium" to "cash flow discount."

POWERLONG CM's case is particularly typical. Among its 97 operating projects, mature-stage projects like Baoyang Powerlong Plaza have maintained average sales growth of 8% for three consecutive years, with fundamentals remaining solid. However, its retail commercial revenue declined 2.6% year-on-year in the first half of 2025, reflecting overall industry pressure. Meanwhile, leading company CR Land's shopping center business revenue grew 19.8% year-on-year, indicating intensifying industry differentiation.

A person close to POWERLONG CM analyzed that the change in control could be a double-edged sword: "If creditors choose to reduce shareholdings, POWERLONG CM will break free from Powerlong Real Estate's control, gaining independence and reducing controlling shareholder burden. But dispersed equity structure will also bring corporate governance uncertainties." This person noted that new shareholders, whether financial investors or industry capital, may reshape the company's development strategy.

From a positive perspective, after breaking free from controlling shareholder constraints, POWERLONG CM can more flexibly adjust its business structure and reduce dependence on residential development business. In fact, the statement in the announcement that "restructuring will not adversely affect operations" already hints that new capital entry may bring resource support.

But challenges are equally apparent. The aforementioned person added: "Commercial real estate is still in adjustment period, and potential buyers may press for lower prices. If creditors have greater disagreements on the restructuring plan, the entire plan may be shelved again." Most commercial management companies faced revenue decline pressure in the first half of 2025, and valuation negotiations will directly affect transaction success.

For POWERLONG CM, the change in control may not be an endpoint, but rather a new beginning amid industry reshuffling - provided that new shareholders possess the capability to empower the company to navigate through cycles.