Why Is CAQ Holdings Struggling with High Vacancies and Cash Crunch?

Leasing Revenue Declines Amid Lease Expiries

CAQ Holdings Limited has reported a 7% decrease in property leasing revenue for the September 2025 quarter, with total leasing income falling to RMB 1.2 million (AUD 257,000) from RMB 1.3 million (AUD 278,000) in the previous quarter. This decline is primarily attributed to the non-renewal of leases following the expiry of several factory and warehouse contracts.

Vacancy Rates Remain Elevated Across Portfolio

The company’s property portfolio continues to experience high vacancy rates, with warehouses at 40%, factories at 67%, and the exhibition centre remaining almost entirely unoccupied at 95%. The administrative building also holds a 46% vacancy rate, unchanged from the prior quarter. These figures highlight ongoing challenges in attracting and retaining tenants, particularly as potential lessees assess the impact of Hainan Island’s evolving open policies.

Exhibition Centre Operations on Hold

Operations at the exhibition centre remain suspended, with system integration testing halted pending new government customs requirements. This regulatory uncertainty adds another layer of complexity to CAQ’s efforts to stabilise occupancy and revenue streams from this asset.

Cash Flow and Financial Position Under Pressure

Financially, CAQ Holdings ended the quarter with a precariously low cash balance of AUD 65,000. The company recorded a net operating cash outflow of AUD 237,000, reflecting ongoing operational costs exceeding receipts from customers, which dropped to AUD 160,000 during the quarter. Despite these pressures, the company has not made payments to director-related parties during this period.

Negotiations and Financing Outlook

CAQ is actively negotiating lease agreements with prospective tenants, though many remain cautious amid the uncertain regulatory environment. Concurrently, the company is engaged in discussions with its financiers to extend the terms of its current debt facilities, which include secured loans from the Bank of Hainan and Hainan Baina Investment Co., Ltd. While the board expresses confidence in reaching a positive outcome, no final agreement has yet been signed.

These developments underscore a critical juncture for CAQ Holdings as it seeks to navigate operational headwinds and liquidity constraints while positioning itself for a potential recovery in leasing activity.