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Guandian.comDuring the period of deep adjustment in the industry, Gemdale Commercial Real Estate exited its real estate assets.

On the evening of July 31, Gemdale Properties & Investment announced that it had jointly established Shenzhen Lingxin Industrial Park Private Equity Investment Fund Partnership (Limited Partnership) to acquire, control and operate all equity interests in four industrial park projects in Shanghai that the group intended to sell. The group expects to receive a net payment of approximately RMB 500 million.

According to Gemdale Properties & Investment, the four industrial park projects are all mature operating assets, located in Songjiang, Jiading and Baoshan Districts of Shanghai, with a total leasable area of ​​439,000 square meters, and the occupancy rate has been maintained at over 90% all year round.

Gemdale Properties & Investment said that each partner in the partnership has extensive experience in investing in and/or operating industrial parks. In the partnership, each member can give full play to their strengths and develop their business better by complementing each other's strengths and integrating resources.

It can be found that insurance funds occupy the majority of the funds, and there are many state-owned assets behind the funds. For now, insurance is still the backbone of real estate exit channels.

Establish a fund to acquire assets

According to the announcement, Gemdale Commercial Real Estate signed a partnership agreement with all parties on July 31, 2024 to jointly establish Shenzhen Lingxin Industrial Park Private Equity Investment Fund Partnership (Limited Partnership). The main business of this partnership is to acquire, hold and operate all the equity of the Gemdale Industrial Park project that the group intends to sell.

According to the Industrial Park Review, the acquisitions are mainly four industrial park projects of Gemdale Properties in Shanghai. The first one is Gemdale Weixin Hongqiao Science and Technology Park, which is 100% owned by Gemdale Properties. The project is located in the G60 Science and Technology Innovation Corridor and the Greater Hongqiao Hub Radiation Area, covering an area of ​​about 48,000 square meters and a total construction area of ​​65,000 square meters. It is an industrial complex integrating R&D platform, manufacturing, office, and commercial supporting facilities. As Gemdale Weixin’s first biomedical professional park, biomedical companies among the companies settled in Hongqiao Science and Technology Innovation Park account for more than 90% of the leased area.

The second is Gemdale Weixin Songjiang Smart Manufacturing Park, in which Gemdale Commercial Real Estate holds a 50% stake. The project is located in the national-level Shanghai Songjiang Economic and Technological Development Zone, covers an area of ​​more than 70,000 square meters and has a total construction area of ​​approximately 110,000 square meters. It is an industrial complex integrating R&D platforms, production and manufacturing, and commercial supporting facilities.

The third one is Gemdale Weixin Jiading Intelligent Manufacturing Park, in which Gemdale Commercial Real Estate holds a 42.50% stake. The project is located in the Jiading International Automobile City section of Shanghai, covering an area of ​​approximately 80,000 square meters and a total construction area of ​​more than 150,000 square meters. It is a high-end manufacturing industry innovation base with new energy vehicles and auto parts as its core industries, integrating intelligent manufacturing, production and research and development, corporate offices, and commercial supporting facilities.

The fourth is Gemdale Weixin Baoshan Intelligent Manufacturing Park. Gemdale Commercial Real Estate owns 50% of the shares of the industrial park. The project is located in the core area of ​​Shanghai Baoshan Industrial Park, covering an area of ​​more than 70,000 square meters and a total construction area of ​​more than 110,000 square meters. It is a high-standard manufacturing industrial base integrating intelligent manufacturing, R&D and production, base innovation, and commercial supporting facilities.

According to the partnership agreement, Gemdale Properties holds the Gemdale Industrial Park project and now intends to sell all its shares in the Gemdale Industrial Park project to the partnership. Based on the transaction arrangement, Shanghai Jindiwei (a subsidiary of Gemdale Properties) must first invest in the partnership as a partner of the partnership, with an upper limit of RMB 300 million, accounting for 20% of the equity of the partnership. The payable capital contribution will be funded by Gemdale Properties' internal resources. After the sale of the Gemdale Industrial Park project is completed, Gemdale Properties is expected to receive a net payment of approximately RMB 500 million (after deducting RMB 300 million from the investment in the partnership).

After the establishment of the partnership, Shanghai Jindiwei (or other subsidiaries designated by Gemdale Properties) and other partnership partners will hold 20% and 80% equity respectively. In terms of management structure, Shenzhen Capital Real Estate Fund Management will serve as the general partner and executive partner, who will be responsible for (among other things) the operation, management, control and decision-making of the partnership; the remaining partnership partners (including Shanghai Jindiwei) will be limited partners.

It is understood that Gemdale Properties will withdraw from some of the industrial park's equity in this transaction, mainly because the newly involved state-owned company requires a controlling stake in order to cooperate with the withdrawal of other shareholders. After the transaction is completed, the four industrial parks will continue to be managed by Gemdale Properties' industrial park operating brand Gemdale Weixin.

The insurance analyst behind the scenes

The analysts behind the fund are state-owned companies and insurance companies.

The fund's investment scale is capped at 1.5 billion yuan, and the deadline for investment is before September 30, 2029. The equity structure of the partnership shows that Nanjing Taibao Xinhui Zhiyuan invested 825 million yuan, accounting for 55% of the equity; Zhonghong Life Insurance invested 344.85 million yuan, accounting for 22.99% of the equity; Shanghai Jindiwei invested 300 million yuan and held 20% of the equity; Hongtu Venture Capital invested 30 million yuan and held 2% of the equity; Shenzhen Capital Real Estate Fund Management, as a general partner, invested 150,000 yuan and held 0.01% of the equity.

Among them, Shanghai Jindiwei is an indirect subsidiary of Gemdale Commercial Real Estate; Shenzhen Capital Group Real Estate Fund Management is controlled by Shenzhen Capital Group Co., Ltd., whose largest shareholder is Shenzhen State-owned Assets Supervision and Administration Commission, and Futian Investment Holding also has shares; Red Soil Venture Capital is wholly owned by Shenzhen Capital Group; Manulife-Sinochem Life Insurance is jointly owned by Manulife Life Insurance (International) Co., Ltd. and Sinochem Group Finance Co., Ltd.

Nanjing Taibao Xinhui Zhiyuan, which holds the largest interest, is a private equity investment fund managed by Taibao Private Equity Fund Management Co., Ltd., a subsidiary of China Pacific Insurance.

It can be found that insurance companies are still important buyers of real estate exits.

Based on the pursuit of stable long-term returns, optimization of investment portfolios, and the need to adapt to asset-liability matching management, insurance companies remain an important channel for real estate exit.

Some analysts point out that with interest rates continuing to fall and high-quality assets difficult to find in the market, insurance companies tend to invest funds in projects with stable returns and longer durations, such as commercial office buildings, logistics properties and industrial parks, in order to preserve and increase the value of their assets.

On the other hand, the current real estate market is in a period of deep adjustment. The industry is accelerating its clearance, asset disposals are increasing, and real estate asset prices are also attractive to a certain extent, especially real estate in core areas of first- and second-tier cities, which may have strong room for appreciation in the future.

For example, on January 1, 2024, New China Life Insurance announced that it would jointly establish a 10 billion yuan fund with CICC Capital to invest in investee companies that hold real estate project assets; AIA Life acquired 95% of the equity of Beijing CapitaLand Star Trade Project for nearly 2.4 billion yuan; China Life System invested 686 million yuan to subscribe to China Resources Commercial REIT; China Life Group spent 3.1 billion yuan to acquire nearly half of the equity of Sino-Ocean Beijing Yiti Port Phase II, etc.

It can be found in some cases that most of the transaction projects are assets in the core areas of first-tier cities such as Beijing and Shanghai.

Gemdale Properties and Investment holds assets such as industrial parks, commercial offices, rental housing, and sales housing. In terms of industrial parks, in 2016, it established Gemdale Weixin, a platform dedicated to the development, construction, and operation and management of industrial parks, focusing on life sciences, artificial intelligence, cultural creativity and other fields, and creating a sophisticated international full-industry platform with high standards.

At present, Gemdale Weixin has achieved a nationwide layout, entering the core cities of East China, North China, Northeast China, Central China, South China, and Western China, and has entered the U.S. market. As of December 2023, it has entered 19 cities, developed and operated 42 industrial projects, and managed an area of ​​approximately 4.15 million square meters.

However, the downturn in the real estate market also has a significant impact on commercial real estate. In the first half of the year, the total contract sales of Gemdale Commercial Real Estate was approximately RMB 9.798 billion, and the total sales area was approximately 747,100 square meters. Recently, the company issued a profit warning for the first half of the year, due to the increase in impairment provisions for joint ventures and the increase in impairment provisions for properties under development. It is expected that the loss attributable to the company's shareholders in the first half of 2024 may be between approximately RMB 2 billion and RMB 2.3 billion.