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Text丨Qin Jiali‍‍‍‍‍

Editor: Li Zhuang

As the real estate market becomes more active, real estate mergers and acquisitions transactions are also on the rise, which provides a better environment for leading real estate companies to resolve risks.

Due to the warming of the real estate market in the past two months, real estate companies have ushered in a window period for selling large commercial and office assets. According to data from China Index, real estate mergers and acquisitions transactions showed signs of activity again in June, with the transaction amount of asset mergers and acquisitions in the real estate industry increasing by 11.5% month-on-month.

At present, leading real estate companies such as Wanda and Vanke are actively promoting "slimming and strengthening" measures and transferring some of their assets. In addition to the transfer of heavy assets, some real estate companies choose to transfer controlling stakes and introduce local state-owned assets. , seeking stronger resource support and transformation and upgrading. An industry insider told this magazine that the current sale of assets by real estate companies is a form of business structure optimization. "Sacrificing" high-quality assets can quickly recover funds and help companies focus their resources on their core business; transferring equity and introducing state-owned capital holdings can enhance the credit and financing capabilities of real estate companies and optimize resource allocation.

"Double Ten Thousand" "Slimming"

Accelerate the transfer of investments

In the first week of July, Wanda sold three Wanda Plazas in Dongguan, Yichun and Yantai. According to incomplete statistics, Wanda Commercial Management has transferred the control of at least 26 companies since 2023, including high-quality projects in the core areas of first-tier cities such as Beijing, Shanghai and Guangzhou. Wanda Group was able to continue deleveraging 。

In recent years, Wanda Group clearly upgrades its asset-light strategy Compared with investing in the construction and holding of Wanda Plaza, it is more inclined to be responsible for light asset operations such as brand output, auxiliary design, construction, investment attraction and management. Data shows that as of the end of November 2023, Wanda Group opened 23 Wanda Plazas last year, of which only 2 were self-owned properties of Wanda Group, and the rest were light asset projects.

Wanda's frequent asset monetization is also related to the failure of its Wanda Commercial Management to be listed as scheduled in 2023, which means that Wanda needs to bear the 38 billion yuan gambling agreement signed with many institutional investors.

However, Wanda's gambling crisis was resolved in March this year. During this period, Wanda Commercial Management signed a new investment agreement with five institutions including PAG and CITIC Capital to establish Dalian Xindame Commercial Management Co., Ltd. (hereinafter referred to as "Dalian Xindame"). The new company will receive an investment of about 60 billion yuan, and the price is that Wanda Commercial Management's shareholding in Dalian Xindame will be reduced from 70.15% to 40%.

According to Qichacha, as of now (July 18), 99.99% of Dalian Xindameng’s shares are still held by Wanda Commercial Management, and there has been no change in equity. The equity transfer has not yet been completed, which means that the 60 billion yuan bailout funds that Wanda is waiting for are still on the way.

In addition to Wanda, Vanke is accelerating the pace of transferring non-core financial investments. Recently, Vanke has transferred the equity of Nanxiang Impression City MEGA, the largest single commercial shopping center in Shanghai. According to Qichacha information, Shanghai Xingxinman Enterprise Management Co., Ltd., the main company of Shanghai Nanxiang Impression City MEGA, changed its equity in June. Shenzhen Intime Management Co., Ltd. changed its shareholding ratio in the main company from 50% to 2%, and RECO YIYUAN PRIVATE LIMITED changed its equity ratio from 50% to 98%. This means that Vanke's Intime Group sold its 48% stake in Nanxiang Impression City MEGA to another foreign shareholder, retaining only 2% of the shares.

Including the Qibao Vanke Plaza transferred in February, Vanke has sold two of its "most profitable" commercial projects in Shanghai this year. The group's financial report shows that in the first half of 2023, the Qibao Vanke Plaza and Nanxiang Impression City MEGA commercial projects achieved operating income of 210 million yuan and 190 million yuan respectively, ranking first and second among the top ten commercial projects operated and managed by the group.

Behind the accelerated shipments, Vanke proposed a package of "slimming and strengthening" plans at its annual performance conference held in April this year to achieve the three goals of reducing debt, transforming the financing model, and focusing on the main business. , including freeing up limited resources to focus on the three main businesses of integrated residential area development, property services, and rental apartments; reducing interest-bearing debt by more than 100 billion yuan in the next two years, and reducing the total scale of interest-bearing debt by more than half in the next five years.

In an investor relations activity record sheet disclosed on July 9, Vanke once again introduced the progress of the "package plan". The company has stepped up efforts to promote large asset transactions this year, including asset transactions and REIT and Pre-REIT funds. Among them, Vanke realized a return of 9.34 billion yuan in asset transactions in the first half of the year, including the transfer of 50% equity of Qibao Vanke Plaza for 2.38 billion yuan in February, the transfer of Shenzhen Super Bay land for 2.235 billion yuan in May, and the completion of the 48% equity transaction of Nanxiang Impression City MEGA by Intime Group in June.

Vanke said that large asset transactions do not necessarily result in losses: "There were losses and gains in the large transactions in the first half of the year. For example, the sale of the equity of Shanghai Vanke Qibao Plaza achieved an equity profit of 1.23 billion yuan. The company will work hard to improve the level of asset management and enhance the value of assets."

According to Vanke's strategic plan to focus on three main businesses, the company currently has many projects that meet its non-core business sales plan. The company's annual report shows that by the end of 2023, Vanke's non-core assets include 203 commercial projects, 33 hotels, 10.02 million square meters of logistics and warehousing, and 4 holiday ski resorts.

As of the end of 2023, the book value of Vanke's investment properties measured at cost is 110.134 billion yuan. If Vanke follows its plan of "selling 20 billion yuan per year", its investment business can provide at least 5 years of "ammunition" for its capital realization.

Real estate major transaction activity increases

Realizing high-quality assets to speed up capital recovery

Since the beginning of this year, leading real estate companies have frequently made large-scale asset transactions. In addition to conventional project equity transactions for the purpose of joint development, The disposal of commercial and office assets can often bring in large amounts of timely cash inflows, alleviating the company's liquidity pressure.

Data from the China Index Academy showed that as asset prices bottomed out, real estate M&A transactions showed signs of activity again, with a total of 17 M&A transactions in the real estate industry in June, 2 more than the previous month. Among them, 15 transactions disclosed transaction amounts, with a total transaction size of approximately 16.93 billion yuan, an increase of 11.5% month-on-month.

For example, in June alone, China Overseas Land & Investment transferred 64.79% of the equity and related debt of Beijing INDIGO Phase II to China Life and Swire Properties for RMB 4 billion; Guangming Real Estate transferred Shanghai Haibo Supply Chain Management Co., Ltd. to Shanghai Food and Drinks Group for RMB 295 million; New World Development transferred 30% of the equity of Shenzhen Qianhai Office Building to Chow Tai Fook for RMB 1.44 billion; Sunac transferred part of the assets of Jinan Cultural Tourism City to Jinan Licheng Holdings for RMB 474 million; LVGEM China Real Estate transferred Shenzhen Hongwan Shopping Center to Shenzhen Futian Industrial Investment Services for RMB 814 million, etc.

Overall, the bulk assets put on the shelves by real estate developers this year are more concentrated in terms of business types and regions, mainly including three types of assets: hotels, offices, and commercial properties, many of which are located in hot cities such as Beijing, Shanghai, and Guangzhou. At the same time, the assets that real estate developers "give up" this year are of higher quality, such as the "most profitable" Shanghai Bund Hyatt Hotel sold by Shimao to Shanghai Real Estate Group, with an annual profit margin of more than 40% all year round. OCT transferred the "most expensive 300,000 yuan per night" Shanghai Bulgari Hotel to Jinfeng Cement.

From the perspective of the receiver, Local state-owned enterprises, insurance funds, foreign capital, and real enterprises are the main buyers in the bulk trading market. For example, the Shenzhen Bay Headquarters Base plot that Vanke listed for sale this year was jointly taken over by its major shareholder Shenzhen Metro and Nanshan District State-owned Assets; part of the equity of Beijing Yitinggang Phase II project under Sino-Ocean Group was transferred to its major shareholder China Life Insurance; most of the assets sold by Wanda introduced insurance companies as new shareholders, including Xinhua Insurance, Sunshine Insurance, Dajia Insurance, Hengqin Life Insurance, etc.

This magazine has learned that in the deep adjustment cycle of the real estate market, The mainstream choice of real estate companies at present is to "reduce the weight" of commercial and office assets that occupy a large amount of funds. Among them, high-quality assets with stable operations located in first- and second-tier cities give real estate companies the ability to quickly realize cash; at the same time, since community businesses, shopping centers, apartments, hotels and other assets have the opportunity to attract investment through channels such as the issuance of public REITs, this indirectly leads to a large amount of circulation of such assets.

Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, told the magazine that the current "giving up" of high-quality assets by some real estate companies is related to strategic adjustments such as easing financial pressure, reducing debt ratios, avoiding future uncertainties, and focusing on core businesses. "With the overall real estate market under pressure, selling high-quality assets is an effective means to quickly recover funds. For example, Shimao Group sold the Shanghai Bund Hyatt Hotel for a total price of 4.5 billion yuan, and it is expected to realize sales proceeds of about 3.01 billion yuan."

Zhang Yue, chairman of Aoyou International, also told the magazine that the current sale of high-quality assets by real estate companies is a manifestation of business structure optimization: "Companies often need to divest some non-core businesses or inefficient assets. This kind of 'giving up' actually helps companies focus more funds and resources on their core businesses, improving operating efficiency and market competitiveness."

Transferring equity and introducing state-owned capital

The development needs of real estate companies will be better met

In addition to transferring heavy assets to recover funds, some real estate companies further transferred equity to inject new momentum and resources into the development of listed companies. Following the introduction of state-owned capital to increase credit by real estate developers such as Central China Real Estate and Jinke Holdings, more and more companies have ceded their controlling stakes and introduced support from local state-owned enterprises.

On July 5, Shirong Zhaoye, one of the "Three Musketeers" of Zhuhai real estate, received a daily limit on its stock price with a tender offer announcement. According to the announcement, Zhuhai Dahengqin Anju Investment Co., Ltd. (hereinafter referred to as "Anju Company"), a wholly-owned subsidiary of Zhuhai state-owned enterprise Dahengqin Group, won about 413 million shares of Shirong Zhaoye through a judicial auction platform, accounting for 51% of the company's total share capital. This move triggered a comprehensive tender offer, and Anju Company is expected to become the new controlling shareholder of Shirong Zhaoye.

Xinhu Zhongbao has previously introduced Quzhou state-owned assets. In January this year, Xinhu Zhongbao further transferred 18.43% of its equity to Quzhou Zhibao, a state-owned enterprise in Quzhou, for a total transfer price of 3.006 billion yuan. Quzhou Zhibao and its affiliates thus held 28.54% of Xinhu Zhongbao's shares, becoming the largest shareholder of the listed company.

According to the announcement of Xinhu Zhongbao, the main reason for the equity transfer is to further optimize the company's shareholder structure, strive for local policy support, comprehensively deepen cooperation, and promote the company's transformation. At present, its major shareholder is actively "protecting the market". According to the announcement of the major shareholder's increase in holdings disclosed by Xinhu Zhongbao in July, Quzhou Zhibao plans to increase its holdings of Xinhu Zhongbao by up to 100 million yuan in the past 6 months.

In terms of performance, Shirong Zhaoye and Xinhu Zhongbao are actually remarkable, and both companies have maintained profitability for a long time. Among them, Shirong Zhaoye has maintained a high gross profit margin of 30% to 70% in the past three years, thanks to the high-quality land reserves acquired at low cost in the early years; Xinhu Zhongbao, which focuses on "real estate + technology", has also maintained a gross profit margin of 22% to 38% in the past three years.

In Bai Wenxi's opinion, some real estate companies choose to transfer equity and introduce state-owned capital holdings. Aims to enhance credit and financing capabilities and optimize resource allocation. "Introducing state-owned capital holdings can enhance the credit and financing capabilities of enterprises and reduce financing costs, which is particularly important in the current financing environment. In addition, the involvement of state-owned capital can not only bring financial support, but also management experience and market resources, thus enhancing the competitiveness of enterprises."

(This article was published in the Securities Market Weekly on July 27. The individual stocks mentioned in the article are only for example analysis and are not investment advice.)