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Interface News reporter | Wang Tingting

The real estate industry is still far from clear, and many real estate companies are still at the peak of debt repayment. They have to put their high-quality assets on the shelves to buy themselves a brief breathing space.

Shanghai's high-quality assets are still favored by investors. The most typical example is Shanghai Nanxiang Impression City MEGA, one of Vanke's benchmark commercial projects, which has previously completed the sale of 48% of its shares to the Singapore Government Investment Corporation.

In the second half of the year, Shanghai's bulk asset transactions became more active. Assets such as the North Bund landmark Xinghui Center and Shanghai Zendai Thumb Plaza have recently welcomed buyers.

On August 20, according to the Shanghai United Equity Exchange, the transaction of 40% equity of Shanghai Guangtian Real Estate Development Co., Ltd. was completed, and the final transaction was completed at a reserve price of approximately 1.72 billion yuan. The seller was Shanghai Yagu Project Management Co., Ltd. (a member of the State Grid Corporation of China). The buyer was not disclosed publicly, but there are market rumors that it is the Indonesian Sinar Mas family.

Public information shows that prior to this, Shanghai Guangtian Real Estate Development Co., Ltd. was 41.22% owned by Hong Kong Construction (Shanghai Guangtian) Holdings Co., Ltd. under the Indonesian Sinar Mas family, 40% owned by Shanghai Yagu Project Management Co., Ltd., and 18.78% owned by Hong Kong Construction (China) Engineering Co., Ltd.

Shanghai Guangtian Real Estate Development Co., Ltd. is mainly engaged in the development and operation of commercial and office buildings, and parking lot management in Block 108, 4th Street, Sichuan North Road, Shanghai. Jiemian News learned that Shanghai Guangtian Real Estate Development Co., Ltd., the project company of Shanghai Xinghui Center, has a registered address of No. 88, Sichuan North Road, Hongkou District.

It is worth mentioning that the current Shanghai Xinghui Center (Plot 108, Block 4, Sichuan North Road) was once the old “land king” of Sichuan North Road.

Plot 108 of Sichuan North Road 4th Street once set a record for the largest land area and the highest transaction price in the history of Shanghai's public land auction. In February 2005, at a land auction held in Shanghai, Guangdong China Construction Shekou Development Co., Ltd. bought the plot for 1.14 billion yuan.

However, in the following six years, the land changed hands several times and was never put into use.

In 2006, China Construction Shekou introduced East China Electric Power and Shanghai Weituo Investment and Business Co., Ltd. and acquired 80% of their shares; in 2008, Hong Kong Construction acquired 60% of the equity of the project company of the land parcel for 1.52 billion yuan, and the remaining 40% of the shares were held by East China Electric Power (a subsidiary of State Grid).

The project was officially launched at the end of 2011. It was not until 2018 that Shanghai Landmark Center was completed, consisting of two 118,000 square meters of super-grade A office buildings and 72,000 square meters of commercial projects.

The project is located at the intersection of Tiantong Road, Sichuan North Road, Suzhou River and Huangpu River, echoing the Lujiazui Financial City across the river, overlooking the Waibaidu Bridge and the Post Office Building. After completion, Shanghai Xinghui Center has not only improved the commercial level of the entire area, but also injected new vitality into the North Bund office and commercial market.

If the rumor that the Indonesian Sinar Mas family is the buyer is true, then after the completion of this acquisition, Shanghai Landmark Center will be wholly owned by the Indonesian Sinar Mas family.

In addition to Xinghui Center, Shanghai Zendai Real Estate Co., Ltd. (hereinafter referred to as "Shanghai Zendai", 00755.HK) has also recently completed the sale of multiple properties in Shanghai and Qingdao.

According to a recent announcement by Shanghai Zendai, Shanghai Zendai has signed an agreement with the buyer and the target company. According to the agreement, Shanghai Zendai has conditionally agreed to the sale, and the buyer has conditionally agreed to purchase the sales shares, with a total valuation of approximately RMB 2.877 billion.

The buyer is Sheng Ruixiang (Hong Kong) Co., Ltd. The announcement shows that the company is a wholly-owned subsidiary of Ruidong Group Co., Ltd. Ruidong Group Co., Ltd. is located in Dezhou City, Shandong Province, and is mainly engaged in the research and development, design, production, sales, installation and maintenance of central air-conditioning products.

The announcement shows that the above-mentioned sales shares refer to the entire issued share capital of each sales target company, including the entire issued share capital of Auto Win, Giant Hope, Best East and Ample Century.

The main assets of the group being sold include the following properties: 2 shop units (supermarket part), 25 shop units, a hotel and 475 parking spaces in Shanghai Zendai Thumb Plaza; a shopping mall with underground parking spaces and a hotel in Qingdao Zendai Thumb Plaza.

In addition, there are 216 shop units and a piece of land in the Yangzhou project; one shop unit and 81 parking spaces in the Xizhen project; a piece of land in the Yantai project; Zhongda Wudaokou Financial Center, Zhongda Kuanyu and Zhongda Cube Building have 190, 50 and 115 parking spaces respectively.

Among them, Shanghai Zendai Thumb Plaza is sold as a whole.

Upon completion of the transaction, the member companies of the selling group will no longer be subsidiaries of Shanghai Zendai, and their performance, assets and liabilities will no longer be included in Shanghai Zendai's financial statements.

The purpose of the asset sale by Shanghai Zendai is to restructure the Group's non-performing and distressed assets and improve its financial position. For example, the property of Shanghai Zendai Thumb Plaza has been used as collateral for a loan; the property of Qingdao Zendai Thumb Plaza has also been used as collateral for a loan and was sealed by the court due to loan default.

On June 7 this year, Shanghai Zendai announced that it plans to sell all the equity of several subsidiaries. The announcement stated that under the downward trend of the industry, the financial situation of the group continued to deteriorate due to the heavy debt financing structure established in the past. Repaying interest-bearing loans has caused huge financial pressure and cash flow consumption to the group.

"The group is constantly exploring and implementing plans to resolve ongoing operational issues and improve the group's financial position. This sale is also one of the options being studied to alleviate the situation," Shanghai Zendai said.

Ultimately, the transaction price was RMB 10 million (approximately HKD 11 million), a premium of approximately HKD 6 million over the adjusted net asset value of the group being sold.

After the disposal of non-performing and distressed assets, the relevant claims were also transferred. Therefore, the remaining interest-bearing loans of Shanghai Zendai will be significantly reduced to only about HK$218.5 million, and the remaining assets of the group are not pledged.

Not all assets can win the market's favor. For example, Li Ka-shing's "super-sized" project in Shanghai failed to sell again at its second recent auction.

On August 16, JD.com's asset trading platform showed that the 40% equity of Shanghai Changrun Jianghe Real Estate Development Co., Ltd. held by Shanghai Changrun Real Estate Development Co., Ltd. and Shanghai Jianghe Real Estate Development Co., Ltd. failed to be sold for the second time because no one bid.

It is understood that Changrunjianghe's 40% stake corresponds to part of the assets of the Gaoshang Field project in Putuo District, Shanghai. Gaoshang Field is the first large-scale comprehensive project built by Li Ka-shing's Cheung Kong Group in Shanghai. The starting price of this auction is about 4.814 billion yuan, a 10% decrease from the first auction price.

Song Hongwei, research director of Tongce Research Institute, believes that due to the influence of the overall real estate market environment, asset prices have not yet bottomed out, and many investment institutions will be more cautious in their actions at present.