According to a report released by CRIC Research Institute, the real estate industry conducted a total of 9 M&A transactions in August 2024, a decrease of 7 transactions from the previous month. Among them, 6 transactions disclosed the transaction amount, with a total transaction scale of approximately 7.51 billion yuan, an increase of 41.6% month-on-month. The average transaction size per transaction increased by 112.4% to 1.25 billion yuan. In terms of the total number of M&A transactions, the heat of M&A activities in August 2024 continued to decline.

The report mentioned that incorporating existing properties into the guarantee housing system gradually becomes an important way for real estate companies to activate their existing assets. In August, Huafa Group announced that it will carry out transactions of existing commercial housing and supporting parking spaces with Huafa Holdings to help establish a rental-purchase housing system in Zhuhai and revitalize its own existing assets to further promote sales; China Merchants Shekou Industrial Zone Holdings and Anjia in Wuhan cooperated to complete the signing of the Yuyuan project and the third phase of the Konggang Center project, with an acquired area of ​​over 0.02 million square meters. It is expected to provide more than 500 sets of affordable rental housing after renovation and decoration.

01 real estate policies: "White List" projects are approved for financing of nearly 1.4 trillion yuan to support real estate companies in deferring related fees.

At the central level, on August 21, the State Council Information Office held a series of thematic press conferences on "promoting high-quality development." According to the latest statistics released by the China Banking and Insurance Regulatory Commission, commercial banks have approved 5,392 "white list" projects for real estate, with approved financing amounts totaling nearly 1.4 trillion yuan.

At the local level, regulatory agencies have introduced policies to further implement financing coordination mechanisms, optimize pre-sale funds management, support real estate companies in deferring land transfer fees and urban infrastructure construction supporting fees, and so on. Guangzhou Huadu District, Jiangxi Ganjiang New District, Chenzhou City, and Shaoyang City and other places have proposed to further leverage the role of the real estate "white list" financing coordination mechanism, meet the reasonable financing needs of real estate companies with different ownership, encourage financial institutions to provide financial support to real estate companies through methods such as extending the maturity of existing loans and adjusting repayment arrangements, and at the same time support real estate companies in deferring land transfer fees and urban infrastructure construction supporting fees within a reasonable period.

Table: Financing Policies for Real Estate Companies at the Central and Local Levels in August 2024

Data Source: Public Information, China Index Research Institute Comprehensive Compilation

02 Business Mergers and Acquisitions: China Resources Land focuses on land acquisition in core cities, Vanke participates in the establishment of a fund to acquire two Vanke Plazas, and China Merchants Huafa includes existing assets

According to the monitoring of China Index Research Institute, there were a total of 9 mergers and acquisitions transactions in the real estate industry in August 2024, a decrease of 7 compared to the previous month. Among them, 6 transactions disclosed the transaction amount, with a total transaction scale of about 7.51 billion yuan, an increase of 41.6% compared to the previous month. The average transaction size per transaction was 1.25 billion yuan, an increase of 112.4% compared to the previous month. From the total number of mergers and acquisitions transactions, the heat of mergers and acquisitions activities in August 2024 continued to decline.

Figure: Number and Scale of Mergers and Acquisitions Transactions in the Real Estate Industry from January 2023 to August 2024

Data Source: Public Information, China Index Research Institute Comprehensive Compilation

From the perspective of the business type of the transaction target, the mergers and acquisitions in the real estate industry in August 2024 include real estate development, commercial and office projects, etc. In terms of residential development, leading real estate companies acquire equity of project companies to obtain high-quality projects and expand brand influence. China Merchants Shekou, together with Shanghai Xuhui Chengtou and Nanchang Urban Public Group, acquired 100% equity of Shanghai New Changqiao Enterprise Development Co., Ltd., and took over the Xuhui District New Changqiao urban renewal project. China Merchants Shekou obtained high-quality projects in the core area of Shanghai, which will help enhance its market position in Shanghai and provide certainty for maintaining its stable performance.

Leading real estate companies are accelerating the disposal of assets and focusing on the layout of residential business. From January to August 2024, China Resources Land listed and disposed of its assets, while acquiring multiple high-quality land parcels, with a land acquisition amount of 15.9 billion yuan, ranking among the top in the industry. The land acquisition amount in core first-tier and second-tier cities such as Beijing, Guangzhou, Hangzhou, Chengdu, and Wuhan accounted for nearly 80%. At the mid-year 2024 performance conference held in August, China Resources Land's management stated that China Resources Land aims to strive for the top four in terms of sales in 2024. These high-quality land parcels are expected to provide a solid foundation for China Resources Land's performance and continuously consolidate and enhance its industry position.

Table: Statistics of mergers and acquisitions in the real estate industry in August 2024 by type

Data source: Public information, CIRE Research Institute comprehensive compilation

In terms of commercial and office projects, Vanke and CITIC Securities, together with Taikang Life, established the CITIC Vanke Consumer Infrastructure Fund with a scale of 2.234 billion yuan, mainly for the acquisition of assets and liabilities of Beijing Jiugong Vanke Plaza and Shenzhen Longgang Vanke Plaza. This move is part of Vanke's focus on its core business and implementation of its own comprehensive program. At the mid-term performance conference for the first half of 2024 held at the end of August, Vanke's management stated that in 2024, it will continue to promote bulk transactions and activate resources. Over 10 projects are currently in the negotiation process. The achieved collection amount has exceeded 10 billion, and the work of bulk transactions in the second half of the year will proceed according to the established plan.

Meanwhile, distressed real estate companies are selling projects to solve debt problems and obtain liquidity. Shimao Group sold a residential, commercial, and mixed-use complex in Jimei District, Xiamen City to China Construction Third Engineering Bureau. The residential part of the project has been completed and delivered. The commercial part has also been completed and started operation, while the office building part (including two floors of commercial properties) is under development. Shimao Group was unable to invest in and support the project due to a liquidity crisis, so it sold the project to China Construction Third Engineering Bureau to repay its debts.

In terms of property services, real estate companies are acquiring property management companies to accelerate the transformation to asset-light businesses. In August, Hua Yuan Property acquired 100% equity of Beijing Hua Yuan Haotian Di Intelligent Property Services Co., Ltd., held by Hua Yuan Group. At the end of April, Hua Yuan Property announced its intention to transfer its real estate development-related assets and liabilities to its controlling shareholder Hua Yuan Group. After the transaction is completed, Hua Yuan Property will focus on general contracting, hotel operation, asset management and operation, property management, urban operation services, and other businesses. This acquisition will promote Hua Yuan Property's transformation into a comprehensive urban operation services provider.

The inclusion of existing properties in the guarantee housing system has gradually become an important way for real estate enterprises to revitalize existing assets. In August, Zhuhai Huafa Properties announced that it will conduct transactions of existing commercial housing and supporting parking spaces with Huafa Group, to assist in the establishment of a housing system that encourages both renting and buying in the city of Zhuhai, while revitalizing its own existing assets and further promoting sales; China Merchants Shekou Industrial Zone Holdings has partnered with Wuhan Anjia to complete signed contracts for the Yuyue project and the third phase of the Konggang Center, with an acquired area exceeding 0.02 million square meters. It is expected to provide more than 500 sets of guarantee rental housing after renovation and decoration.

Merger and acquisition in finance: Kimco received 12 applications for debt restructuring, and Cinda Real Estate and Minsheng Trust took over the Baoneng City project in Hefei.

At the group level, Kimco issued a progress announcement on the public recruitment and selection of reorganization investors. As of August 16th, Kimco has received formal registration materials from 12 potential reorganization investors, involving a total of 17 enterprises. Potential reorganization investors include a consortium of Zhongjin Capital (3 companies), Changcheng Guofu Property, Sichuan Capital Market Relief Development Securities Investment Fund Partnership (Limited Partnership), China Merchants Ping An Asset Management, China Foreign Trade Trust, a consortium of Shanghai Houjia Health Technology (3 companies), Yiwu Tianxiang Travel Cultural Technology, Chongqing Keruijia Information Technology, Guangzhou Borun Enterprise Management, a consortium of Chengdu Fengzhi Technology (2 companies), Jinxiu Zhonghe (Tianjin) Investment, and Chongqing Meilian International Warehousing and Transportation Group, among others.

At the project level, Cinda Real Estate and Minsheng Trust took over the Baoneng City project in Hefei. On August 5th, the managers of Hefei Baohui Real Estate Management Co., Ltd. announced the results of the restructuring investor recruitment with real estate assets in the four-phase residential area, commercial area C, and commercial area D. it is known that in 2014, Baoneng Group won the bids for two plots of land at Binhai in Hefei for the development of the Baoneng City project, for 1.14 billion yuan and 2.4 billion yuan respectively. The project includes residential, commercial and office, and hotel formats. In 2018, after the completion of residential phases one to three, the remaining residential phase four and commercial projects were in a state of stagnation. In May 2021, the main structure of the Baoneng City T7&; MALL project was completed, but construction delays were caused by disputes with the general contractor. With this acquisition of Hefei Baoneng City, Cinda Real Estate may be involved as an operator in project development and management.

Table: 2024 January to August participation of financial institutions in real estate mergers and relief situations

Data Source: Public information, China Real Estate Institute comprehensive compilation

Appendix Table: Real estate industry merger and acquisition situation in August 2024

Data source: Public information, comprehensive compilation by CITIC Research Institute.