Kardan N.V. in the First Quarter: Dalian Improves as the Debt Repayment Forecast Moves to 2028

The first quarter at Kardan N.V. sharpens the question left open at the end of 2025: Galleria Dalian works, but the bond timetable does not. The mall kept high occupancy, rental revenue rose in renminbi, NOI improved, and the project loan remains compliant. The parent layer is weaker: bond liabilities rose under effective-interest accounting, parent cash is almost absent, and the company now says it does not expect to sell the mall by December 31, 2026. The updated forecast places both the large asset sale and the large bond payment outside the original window, before taxes, transaction costs and possible early-repayment fees. The current read depends less on another NOI improvement and more on whether bondholders agree to extend time without extracting too much value.

Dalian Improved, but the Bond Timetable No Longer Holds

Kardan N.V. is now mostly a leveraged holding company built around Chinese real estate. Through Kardan Land China it holds Galleria Dalian, a small remaining residential-development exposure, and jointly controlled residential companies. Tahal is no longer a meaningful current cash source, and the cash-flow forecast assumes no material payment from TGI or from a sale of that holding.

The previous annual coverage, Kardan N.V. in 2025: Dalian Stabilized, but Value Is Still Trapped Below the Debt, framed the key test as whether high mall occupancy could turn into parent cash before December 31, 2026. The first quarter answers negatively. The company says it does not expect to realize Galleria Dalian by the maturity date set in the new debt arrangement, and is examining options with bondholders to postpone repayment.

That adds the timing layer that matters most now: even if the asset is functioning, the original timetable no longer looks realistic under the company's own assumptions.

The sharp gap in the quarter is between the Dalian asset and the parent company. At the asset level, Galleria Dalian improved. Rental revenue was EUR 2.7 million, broadly unchanged in euros from the comparable quarter, but in renminbi it rose by about 7%, from RMB 20.6 million to about RMB 22.0 million. Adjusted NOI increased to about EUR 1.8 million and, in renminbi, to RMB 14.3 million, about 15% above RMB 12.4 million in the comparable quarter. The gross margin in the investment-property segment rose to about 75% from about 69%.

The table clarifies the problem: the mall is not collapsing operationally, but the company is not measured only by Dalian NOI. It is measured by the ability to turn NOI, value and sale optionality into cash that reaches the parent in time.

Residential development does not solve the problem either. No units were sold in the first quarter, only one unit was delivered, and total inventory stood at 235 apartments, of which 232 were unsold. About 98% of the inventory was already completed but still unsold. Since 2023, the company has had to offer discounts of up to 30% in jointly controlled projects. This is inventory that needs to clear in a weak Chinese market, while releasing very little cash to the parent.

The Solo Forecast Moves the Big Cash to 2028

The important number in the quarter is not the EUR 36.9 million loss. Much of it reflects effective interest on the bonds, driven by the low fair value used in the new debt arrangement, and will keep creating significant interest expense through the end of 2026. The more important number is the solo cash-flow forecast for the company and GTC RE.

This is an all-in cash flexibility view at the holding-company level, not a measure of recurring cash generation from the asset. It asks what remains after headquarters costs, expected dividends, asset disposals and bond payments. On that basis, there is almost no room for maneuver through the end of 2026.

This forecast says much more than a standard warning sentence. It assumes that the large asset realization and the large bond payment happen only in the January to March 2028 window, not under the original December 31, 2026 repayment date. The filing effectively presents a scenario in which the debt solution is pushed out.

Parent-level liquidity explains why that delay matters. At the end of March 2026, the solo financial statements showed EUR 190 thousand of cash and EUR 144 thousand of short-term investments, against current bond liabilities of EUR 152.4 million and another EUR 7.0 million of payables. The parent equity deficit reached EUR 163.9 million. Consolidated cash was much higher, at EUR 9.5 million, but that is mainly cash in the Chinese operating layer, not cash already available at the parent.

Dalian's Value Still Has to Pass Through Banks, Taxes and Bondholders

The first friction is that the sale proceeds in the forecast are not fully net for debt holders. The company presents Galleria Dalian proceeds based on the asset's book value at the end of March 2026, about EUR 99.9 million, less the project loan and projected interest through the original repayment date. It also says it cannot yet calculate taxes, transaction costs or early-repayment penalties, so those amounts are not included. The latest valuation also highlighted that an immediate sale within 12 months may require a 20% to 35% discount to the mall's value at the end of 2025.

The second friction is that the asset is funded at the local project layer with restrictions. The Dalian project loan balance was RMB 366.5 million, about EUR 46.2 million, at the end of March, and is repayable over 15 years from May 2025. The project company is compliant, but it must keep cash balances at all times of at least 1.2 times the bank payments due over the next six months, amounts ranging from RMB 21.5 million to RMB 25.1 million. The loan agreement also gives the bank tools to request collateral, guarantees, changes in terms or early repayment in cases such as a significant decline in asset value, deterioration in the real-estate sector, deterioration in lease agreements or changes in market interest rates.

Those clauses are not necessarily unusual for an income-producing real-estate loan, and the company cites a legal opinion that they are common. Here they matter because the value must pass through the asset, project company, KLC, GTC RE and parent before reaching bondholders. Every reserve requirement, realization delay and sale cost not included in the forecast reduces the amount that can actually move upstream.

The next few quarters will not be judged mainly by another few percentage points of NOI growth. The proof point has shifted to the bondholder talks and the terms of a Dalian realization. If the company presents an agreed postponement with a clear timetable and repayment mechanism, market interpretation could improve without a dramatic change in mall occupancy.

If, however, the delay stretches without a framework, or if a possible realization requires a large discount, high taxes or penalties, Dalian's operating improvement will not be enough. Continued weakness in Chinese apartment sales would also weigh on the story, because the dividend forecast depends on KLC and the Lucky Hope companies, while material distribution decisions have not yet been made and the project companies must also preserve cash for their own needs.

Conclusions

The first quarter strengthens the conclusion that Dalian is neither the company's only problem nor its full solution. The mall produced a better operating quarter, but the company now says it does not expect to sell it by December 31, 2026, and its forecast pushes the realization and large bond payment into a later window. That turns 2026 from a repayment year into a negotiation year: without an agreed postponement or binding realization plan, the NOI improvement remains trapped at the asset level.

The counter-thesis is fair. If Dalian is sold close to book value, with limited leakage from taxes and transaction costs, and if bondholders provide time on terms that are not too punitive, the mall can still become a meaningful repayment source. But the first-quarter evidence leans the other way. The value exists, access to it remains difficult, and the original timetable no longer looks like the company's own working case. The next reports should be read through three checkpoints: an agreement with bondholders, real progress on a Dalian realization, and whether dividends and disposals from China actually begin reaching the parent company.