Source: MEGA WAVE

Author: Xie Zefeng

In the real estate industry shrouded in haze, wave after wave of significant bullish news is coming.

The Central Political Bureau meeting pointed out the need to promote the stabilization of the real estate market; the central bank stated that it would reduce the interest rates on existing house loans and unify the minimum down payment ratio for house loans; the CSRC is guiding listed companies to introduce measures for market value management, and companies trading below net asset value in the long term should disclose plans to enhance their valuation.

The real estate sector has been a heavily hit area with many stocks trading below net asset value for a long time. With a large number of real estate companies defaulting, stock prices have been severely impacted, with over 60 real estate stocks trading below net asset value, and many facing the risk of delisting.

Under the stimulus of favorable policies, the stock prices of real estate listed companies in the capital market have been rising significantly.

On the corporate restructuring front, many large private real estate enterprises urgently need 'white knights' to provide financial support, and indeed some have begun to take action.

Closing on September 20th,$CHINA AOYUAN (03883.HK)$Announcement, Middle East Investment Group Multi Gold Group Limited will become the company's new strategic investor, replacing Guo Ziwen as the largest shareholder. China Aoyuan, after a long dry spell, saw its stock price soar 140% the next day.

Following Wanda Group's introduction of a consortium composed of Taimei, CITIC, Abu Dhabi Investment Authority, and Mubadala Investment Company, this is the second real estate company this year to be 'bottom-fished' by Middle Eastern capital.

In addition to foreign investment, state-owned assets across the country have reached out to rescue struggling real estate companies. Well-capitalized insurance funds have also stepped in to purchase multiple projects, retired coal bosses have made a comeback, even Beijing has started buying land personally to enter the residential development sector. $KE Holdings (BEKE.US)$Not only in the capital markets, but the underlying excitement in the real estate market reflects various aspects.

The presence of Middle Eastern tycoons

救万达，盘奥园。

继石油炼化、新能源汽车、文娱、新科技等领域后，精明的中东土豪又瞄准了中国地产业。

万达和奥园率先被中东资本装进“购物车”。根据中国奥园公告，创始人郭梓文控制的Ace Rise计划将0.622 billion股转让给Multi Gold。完成后，Multi Gold将拥有中国奥园16.48%的股份，郭梓文下滑至16.38%。Multi Gold将成为最大单一股东，郭梓文失去控股股东位置。

1996年，郭梓文联手胞弟创办中国奥园，公司在地产业黄金期的余晖中（2019年）销售额首次突破千亿元，2020年增长至133 billion元，但到次年10月正式“暴雷”。

此后，公司进入债务重组阶段，并通过发行新股、美元债、可转债、永续债等方案，再次“续命”。境外债重组后，其净资产增厚31.35 billion元，财务状况得到改善。

但当前的 $CHINA AOYUAN (03883.HK)$ 仍是风雨飘摇，得益于债务重组，上半年净利润高达22.312 billion元，但剔除重组收益，仍是亏损。截至上半年末，有息债务仍有76.2 billion元，其中53.4 billion元将在一年内到期。总资产188.6 billion元，而负债总额则有190.4 billion元，还是资不抵债的状态。

In the current situation of overall pressure in the real estate industry, China Aoyuan cannot survive alone, the once trillion-dollar real estate companies have almost lost their ability to self-generate revenue. In the first 8 months of this year, Aoyuan's total sales were only 6.3 billion yuan, a 33% year-on-year decline, ranking 84th. With only 1.6 billion yuan in cash, restricted funds of 2.318 billion yuan.

By introducing Middle Eastern strategic investment, Aoyuan is considered to have a new lease on life.

Multi Gold is from the UAE, but it has only one actual owner, Alobeidli, who has over twenty years of experience in technology, real estate, and strategic consulting. On the China Aoyuan official website, Guo Ziwen has passed on the position of Chairman of the Board to Alobeidli.

Interestingly, Aoyuan has not yet disclosed the specific price and terms of the transaction. Speculation from the outside is that it might be sold at a low price, affecting the stock price.

Based on the closing price on September 20th, China Aoyuan's market capitalization is 0.45 billion Hong Kong dollars. Buying 16.48% of the equity would only require just over 74 million Hong Kong dollars, even with a double premium, it would only need around 0.15 billion Hong Kong dollars. For so many years, to acquire a controlling stake in a company that was once a trillion-dollar real estate enterprise at such a low cost is absolutely unimaginable.

By adding Middle Eastern capital this time, China Aoyuan's intention is also very clear, wanting to leverage Alobeidli's social resources to connect with more Middle Eastern capital in order to "introduce potential investors to the company" and make a complete turnaround.

Compared to the mystery of Aoyuan, Wanda's entry is a real hefty investment. In March of this year, Wanda Commercial Management received a total of 60 billion in investment from two Middle Eastern investment institutions, Abu Dhabi Investment Authority, Mubadala Investment Company, along with Taimei Investment, Citic Capital, and ARES consortium.

The cost is that Wang Jianlin lost absolute control of Zhuhai Wanda Commercial Management, with his shareholding dropping to 40%, while the consortium collectively holds 60%.

The return is that the warning alarm for the listing gambling deal of Wanda Commercial Management was lifted, the liquidity crisis was greatly relieved, and old Wang can finally breathe a sigh of relief.

In the past year, Wanda Commercial Management's equity holdings have frequently been frozen and sold off, even the headquarters in Beijing was sold off, and control of Wanda Film was transferred to Coliseum. Wanda, in crisis, urgently needs a capital injection, but the cost is that Wang Jianlin's controlling stake ultimately loses out.

State-owned insurance companies crazily buying

Private real estate enterprises are in full retreat.

In this round of real estate bargain hunting, local state-owned enterprises and financially strong insurance companies have taken on the role of the main force.

According to incomplete statistics, at least nine insurance companies have successively made moves this year, collectively acquiring 13 real estate projects. Among these,$NCI (01336.HK)$It's the third time that they have taken over assets from Wanda.

On September 24, Nanjing Wanda Mall changed hands, Dalian Wanda Commercial Management exited, and the new shareholder is Kunhua (Tianjin) Equity Investment Partnership (Limited Partnership).

The company is exactly the one $NCI (01336.HK)$ jointly created by Zhongjin Capital to build a billion-dollar investment fund. New China Life Insurance contributed 9.999 billion yuan as an LP, while Zhongjin Capital subscribed 1 million yuan as a GP. This fund has become the vanguard for New China Life Insurance's bottom fishing in real estate assets.

In April and July before, Wanda Group's Beijing headquarters - Beijing Wanda Plaza Real Estate Co., Ltd. and Yantai Zhifu Wanda Plaza Co., Ltd. successively sold shares to Kunhua Equity Investment.

Also arriving to relieve the situation are Sunshine Life Insurance, Dajia Insurance, and others. At the end of May and early July this year, Sunshine Life Insurance purchased Hefei Wanda Plaza and Dongguan Houjie Wanda Plaza through Suzhou Lianshunlu Number Retail Management Company; in September last year, Dajia Insurance joined hands with Hengqin Life to invest in Shanghai's Zhoupu Wanda Plaza.

Another major project invested by insurance funds is the second phase of Yidi Port in Beijing, which was initially co-operated by $SINO-OCEAN GP (03377.HK)$and $SWIREPROPERTIES (01972.HK)$ and is expected to have a total investment of 23 billion yuan. However, as Sino-Ocean Group is on the brink of collapse, China Life Insurance has even directly written off the value of the Sino-Ocean equity it holds.

Considering the scale and size of Yidi Port, selling for cash is also a reasonable choice. On June 7th,$CHINA LIFE (02628.HK)$,$SWIREPROPERTIES (01972.HK)$分别出资3.1 billion元、0.9 billion元接手颐堤港二期64.79%的股权及相关债权。

只是该项目净资产值估价8.4 billion元，本次交易价格相当于打了七折，但在如今的市场行业下，能够出手已是难得。接手的国寿和太古地产，一个是远洋集团的第一大股东，一个则是该项目的长期投资方，在大股东的支持下，远洋翻盘还有机会。

此外，财大气粗的 $PING AN (02318.HK)$ ，购入了北京丽泽金融商务区部分地块；收购鹤山合能、维龙蓬江、安华维龙（西咸新区）仓储服务三家公司；并对上海东方万国等四个产业园新增出资。

友邦人寿一口气以2.4 billion元收购了北京CBD的凯德·星贸项目控股权，这是友邦在北京首个直接投资的地产项目。

梳理起来看，险资收购的标的没有住宅项目，均为处于一二线城市的写字楼、物流园、购物中心等出租型物业，这些项目和险资追求长期稳定收益的特征相符合。

State-owned assets are also the protagonists of this round of consolidation of troubled real estate companies, typical cases include Zhuhai state-owned assets taking over guangdong shirongzhaoye, Quzhou state-owned assets taking the helm of xinhu zhongbao, Hubei state-owned assets entering sanxiang impression, etc.

The largest acquisition amount belongs to the restructuring of xinhu zhongbao. Starting in February last year, Quzhou state-owned assets' two investment funds successively invested 2.27 billion yuan and 3 billion yuan, totaling 5.27 billion yuan, to acquire 28.54% of xinhu zhongbao's equity, becoming the new decision-maker.

Xinhu Group was founded by former Zhejiang's richest man, Huang Wei, who relied on selling stocks and warrants to complete the original accumulation. After that, Huang Wei flourished in the futures, securities and other financial fields, then integrated Xiangcaizhengquan to become the second largest shareholder of shanghai dzh limited, and also made a name for himself in the real estate industry.

But as the real estate market rapidly declined, the company's trust and wealth management products failed, and it got involved in disputes involving Xinjiang's mineral rights. The Xinhu Group teetered on the brink, with Huang Wei admitting, 'We can only recover everyone's money by regaining the mines. If we can't, I may go bankrupt.'

After being acquired by Quzhou state-owned assets, xinhu zhongbao was renamed Quzhou Development, with its headquarters relocated to Quzhou City. While continuing its existing real estate business, it is also vigorously developing technology manufacturing, financial services, etc.

It is foreseeable that private real estate will continue to decline, while state-owned enterprises and large insurance funds will further accelerate their integration pace in the future.

Coal bosses, intermediaries, and mysterious figures

Private capital bottoms out.

Overlooking the Pujiang River in the living room, located in the heart of the Shanghai CBD by the riverside, neighboring the Oriental Pearl Tower and the Jin Mao Tower, Zhongliang Seaview One is known as a unique luxury residence that is no less than Tomson Riviera.

The project was originally owned by Grandjoy Holdings Group's Shanghai Pengli Real Estate, but in November last year, Grandjoy Holdings Group sold this core asset to Shanghai Yongpeng Industry for 4.142 billion yuan.

The bigwig behind Yongpeng Industry is the well-known coal tycoon Liu Manshi from Inner Mongolia, who is now 75 years old. He made his fortune in coal, becoming Inner Mongolia's richest man in 2012.

The Manshi Group under his control is a diversified enterprise that includes energy, logistics, real estate, tourism, and food industries. It currently operates six large coal mines with an annual production/sale of over 20 million tons of thermal coal.

In the past two years, due to the rising prices of natural gas, coal, and other resources, coal companies have seen lucrative profits. Coal tycoons who had been out of the limelight for many years have started frequent property acquisitions in prime cities like Beijing.

It is said that in October of last year, a mysterious individual from Shaanxi, also a coal tycoon, acquired the W Beijing Chang'an, previously owned by Jin Mao, for 2.8 billion yuan.

Last year, several plots of land in Gongchen Street, Fangshan District, Beijing, attracted the attention of coal tycoons from Shanxi. Shanxi Jinhuihai finally outbid China Resources, Longfor, and China Evergrande with 1.51 billion yuan to acquire them.

Jinhuihai is fully owned by Shanxi Jinquan Energy Group, backed by Shanxi coal tycoon Wen Qiugui from the Wen family in Jiexiu. The company owns 4 coal mines with an annual production of 2.1 million tons of coking coal and 0.9 million tons of thermal coal.

After winning the project, Wen Qiugui brought in the newcomer Shan Dong's Zhang Gang to jointly develop Jingxi Runfu.$CHINA RES LAND (01109.HK)$Shandong's new richest man, Zhang Gang of Xinfalu Aluminum, jointly developed Jingxi Runfu.

Apart from the coal bosses, $BEKE-W (02423.HK)$ by personally buying land and operating residential projects as an intermediary, he basically threw a depth charge into the persistently sluggish real estate market.

Ke Holdings had long been eager to enter the land market. On September 20, Ke Hao Jia Real Estate won the H12 plot of Phase III of Chengdu Financial City in Jinjiang District with a bid of 1.076 billion yuan, with a high floor price of 27,300 yuan/m², a premium rate of 42.19%, instantly becoming the 'land king' of Chengdu.

On July 12th last year, Peng Yongdong issued an open letter to all Ke Holdings employees, pointing out that Ke Holdings' business should expand from a core brokerage business with two wings to a core brokerage business with three wings, by adding residential development business on top of the core brokerage and two wings (Huizhu for Rent, Home Decoration).

Familiar with real estate brokerage business, holding a massive amount of "first-hand real data", Beike personally entering the market management is seen as a leading indicator of the real estate market heating up.

Based on intermediaries and having long-term developer channels, Beike, which has turned to the first party, relies on massive big data and sales channels to design products in the C2M model.

This approach breaks the traditional path of standardized large-scale replication and expansion by developers. In the era of real estate reaching a stage of existing stock, it can be more closely aligned with user needs, which is a bold innovation.

Moreover, with such a huge amount of real transaction data and an integrated online and offline presence plus a strong marketing team, against the backdrop of the central government's push to promote the establishment of new real estate development models, Beike's timing of market entry is spot on.

In conclusion,

Occupying vast financial assets, influencing a long industrial chain, affecting the country's economic development, and being a pillar of wealth for households, the importance of real estate is beyond doubt.

However, the cyclical nature of real estate as a major asset class is too heavy and too long, leading many private enterprises to be unable to support themselves during downward cycles.

Capital will buy or sell at what they believe to be the right time, the price may be very expensive, or it could be super cheap, this is the market. Since last year, $KERRY PPT (00683.HK)$Swire Properties, Henderson Land, and other foreign investments have entered the real estate projects in Shenzhen. Middle Eastern capital has started to participate, with JPMorgan bottom-fishing in the secondary market.$COUNTRY GARDEN (02007.HK)$State-owned assets, insurance funds, coal magnates, intermediaries, and mysterious funds have all started bottom-fishing. It can be said that compared to the previous highs, these prices have already plunged to the ground.

At the same time, the central government clearly stated its intention to promote the stabilization of the real estate market. A series of actions indicate that the signal of the real estate market hitting bottom is very strong.

The fundamental change in supply and demand relations determines that real estate is unlikely to return to the past fervor. However, at present, whether it is foreign capital, state-owned capital, or coal magnates that have already bottom-fished, the probability of success is quite high.

Editor/Rocky