The fund will mainly be used to acquire two subsidiary companies of Vanke, with the main assets held by these two companies being Beijing Jiugong Vanke Plaza and Shenzhen Longgang Vanke Plaza. The total scale of the Pre-REIT fund is 2.234 billion yuan, of which Vanke Group temporarily recognizes 56.05% of the contribution, and will transfer 36.05% of the contribution shares to other institutions later.
Vanke has made new moves in the capital markets on August 14 according to Cai Lian.
Vanke announced on the evening of August 13 that it has signed a limited partnership contract with Zhongxin Jinshi Fund Management Co., Citic Securities Investment Co., Ltd., and Taikang Life Insurance Co., Ltd. to jointly establish the Zhongxin Vanke Consumer Infrastructure Pre-REIT Fund.
The fund will mainly be used to acquire two subsidiary companies of Vanke, with the main assets held by these two companies being Beijing Jiugong Vanke Plaza and Shenzhen Longgang Vanke Plaza, as well as operating property loans and other liabilities. The fund will appoint Zhongxin Jinshi as the transaction coordinator and fund manager responsible for fund investment management and operation-related work.
According to the information released by Vanke, Shenzhen Longgang Vanke Plaza and Beijing Jiugong Vanke Plaza, which are invested by the above-mentioned fund, are both core assets with stable operations, and their revenues in 2023 are expected to exceed 2 billion yuan and 600 million yuan respectively. After the transaction is completed, it is expected to provide Vanke with positive cash flow and profits.
It is understood that the total scale of the Pre-REIT fund is 2.234 billion yuan, of which Taikang Life subscribes 35%, CSCI and Zhongxin Jinshi subscribes 8.95%, and Vanke Group temporarily recognizes 56.05%, and will transfer 36.05% of the contribution shares to other institutions later.
"The company's subsidiary participated in investment in the Zhongxin Vanke Consumer Infrastructure Fund, which is an important measure to implement the company's 'one package plan' and helps the company focus on its main business, streamline its body, and construct a strategic, sustainable asset securitization platform for the future," said Vanke.
At the 2023 annual general meeting of shareholders, Vanke Chairman Yu Liang stated that Vanke will launch a "slimming" plan. The company has formulated a Slimming Fitness Package for this purpose.
Judging from the information released, Vanke has disposed of a considerable amount of assets this year.
On February 20 this year, Link REIT announced it had completed the acquisition of the remaining 50% equity of Shanghai Qibao Vanke Plaza owned by Vanke. The project is known as Vanke's most profitable commercial project, and with the completion of the acquisition, Link became the new owner of the project while Vanke completely withdrew from it.
After selling Qibao Vanke Plaza, according to information released by the Shenzhen Public Resources Trading Center on May 27, Vanke transferred the land use right of Shenzhen Bay Super Headquarters Base T208-0053 to Shenzhen Iron and Steel and Shenzhen Baishuo Yinghai Co., Ltd. for a joint bid price of 2.235 billion yuan.
In July, it sold its Nanxiang Impressions City MEGA commercial project in Shanghai. Among the top ten commercial projects (sorted by operating income) operated and managed by Vanke, Shanghai Nanxiang Impressions City MEGA ranks second, second only to Shanghai Qibao Vanke Plaza.
One real estate agency analyst pointed out that Vanke sold its two most profitable commercial projects for self-rescue and to quickly recoup funds. Its determination to dispose of assets and to slim down can be described as quite big. By transfering some of its projects, Vanke has obtained cash inflows. But on the other hand, if all its quality assets are transferred, it may also affect its long-term development.
"How to obtain liquidity and turn the previously invested gold into circulation, while retaining some equity of its considered high-quality, potential projects, requires an appropriate approach to address. The REITs done for some of its commercial projects before and this consumer infrastructure fund might be a good approach. The latter could have benign cash flow while retaining corresponding interests in high-quality projects," the analyst said.
It is worth noting that the fund established this time will entrust Vanke's subsidiary Yinli Group to continue to provide asset management services. On April 30 this year, Zhongjin Yinli Public REIT, a subsidiary of Yinli Group, was listed on the Shenzhen Stock Exchange, providing the possibility for the Pre-REIT fund to dock with public REITs in the future.
According to public information, the domestic REITs market has developed for three years. As of July this year, the total financing scale has exceeded 100 billion yuan, and the effect of revitalizing existing assets is remarkable. However, compared with the trillion-level stock asset volume in the country, the current REITs market still has huge space for development, and the construction of a multi-level REITs market needs to be promoted, among which Pre-REIT funds are an important component.
In fact, Vanke has made positive progress in many aspects of real estate funds in the first half of this year, and has continuously built a strategic, sustainable asset securitization platform for the future. So far, Vanke's affordable rental housing REIT and logistics warehouse REIT are in the application process, and Jianwan's rental housing Pre-REIT fund has also achieved expansion in the Guangzhou project.