Hengda Jointly Develops Two Or Three Line Retail Commercial Real Estate In Wangfujing

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The giant Wangfujing announced in October 31st that the company will establish two joint ventures with Hengda Group, a wholly owned company owned by Hengda Real estate, to jointly integrate the resources of commercial real estate and retail industry.

This is also following this year's 100 billion commercial real estate plan, Hengda Real estate business in the territory of a big move.

Huang Wenjie, chairman of Chu Rui commercial planning and operation organization, told reporters that Wangfujing has strong brand advantages and rich experience in operation. Hengda has abundant project resources in the two or three line cities. The two sides can better expand the two or three line city retail real estate through complementary advantages, and are expected to make use of REITs (real estate trust investment fund) to realize asset securitization.

Evergrande holds 51% stake in a joint venture

The announcement issued by the Wangfujing showed that in October 30th, the company signed a cooperation agreement with Hengda Group to jointly set up two joint venture companies, one is a joint venture of commercial property, the name is "Wangfujing department store Hengda commercial limited company" (hereinafter referred to as the commercial property company), the main business is the development of urban complex or commercial real estate, and the other is a business management joint venture company. The name is tentatively set up, "Wangfujing Hengda department store business management Co., Ltd." (hereinafter referred to as the commercial management company), the main business is to manage and manage the commercial property within the agreed scope of the two parties.

It is reported that commercial property companies registered capital of 1 billion yuan, of which Evergrande Group invested 510 million yuan, holding 51%, Wangfujing invested 490 million yuan, holding 49%.

The registered capital of commercial management companies is 50 million yuan, of which Wangfujing invested 25 million 500 thousand yuan, holding 51%, and Hengda Group invested 24 million 500 thousand yuan, holding 49%.

Wangfujing said that through the strategic cooperation with Hengda Group, the company will give full play to Hengda's commercial property development and construction advantages and Wangfujing's business management advantages, so as to bring sustained commercial real estate resources to the company, reasonably enhance the proportion of the company's own property, while avoiding high risk factors such as high cost of property acquisition, unstable sources and unreasonable property structure, so as to ensure the stability of the company's operation and the sustainability of its future development, in line with the company's development strategy.

about

In spite of the fact that its residential real estate business has already exceeded 100 billion scale, the company has only made brilliant achievements in the field of commercial real estate this year.

According to the China real estate report, Xu Jiayin, chairman of Hengda Real Estate Board, announced in June this year that the "upgraded version of Wanda Plaza" should be built at the internal meeting.

According to the plan, the total commercial area of Hengda business group will exceed 4 million square meters, and the total business assets will reach 100 billion yuan.

To this end, Hengda set up department stores, supermarket management companies and amusement management companies under the commercial group. It is responsible for managing the more than 300 commercial projects of Hengda in more than 130 main cities of the country. The projects cover the business of community, business center, Hengda Movie City, and large centralized business. The total business area of management and operation is more than 2 million square meters.

In the light of Wanda's development mode, Hengda also vigorously develops retail businesses such as department stores, and intends to make it one of the main formats of commercial real estate.

"This cooperation is a complementary advantage."

Huang Wenjie told the daily economic news reporter that at present, the retail industry is suffering from the impact of rents. Many retail stores have gone through the incubation period and have often been asked to rent or even remove them by the owners. This has brought instability to the long-term operation of the company. So WAL-MART, Suning and other retailers are also entering the commercial real estate and finding their own initiative by building their own stores.

Establishing a cooperative relationship with Hengda means that Wangfujing can directly share Hengda's rich commercial real estate resources in the two or three line cities, and greatly reduce the difficulty of expanding stores.

Although Wangfujing is a leader in the domestic retail industry, but in recent years, the impact of the electricity supplier and consumer downturn, the traditional department stores are in trouble, and the company is accelerating the pformation to the shopping center format.

Lin Haoran, an analyst at Guotai Junan, believes that due to the impact of property assets on operating cash flow, leasing property has become increasingly difficult in location selection, property negotiation and other links, which has slowed down the pace of opening stores in recent years in Wangfujing.

This cooperation with Hengda can not only provide stable and suitable commercial real estate resources, but also will be issued by REITs and sunning cloud to achieve asset securitization. The two sides are expected to use the real estate financial tools to obtain cash flow from operation in the future, and finally realize the business mode of "heavy assets and light cash".

For Hengda, joining the most famous retailers in China will also help speed up the realization of 100 billion plans for its commercial real estate.

Mr. Lin, director and assistant director of commercial real estate department of DTZ, said that Hengda's strength lies in housing, but commercial real estate is more particular about its operation. It has higher requirements for talents and management. Cooperation with Wangfujing can quickly make up for its shortcomings in operation.

In addition, Hengda Group has actively expanded the field of fast moving consumer goods such as mineral water, infant formula and milk powder this year. As Wangfujing's retail stores have landed faster in their flats, they will provide strong support for the company's fast selling business to expand terminal sales channels.

The cooperation is undoubtedly a strong alliance, but it still faces many challenges to play the role of "1+1>2".

Huang Wenjie believes that Wangfujing is better at operating in a second tier city, while Hengda projects are more focused on the two or three tier cities. Whether the cooperation can adapt to the new market environment and better adjust the format combination to find business opportunities is the biggest challenge for both sides.

Huang Wenjie pointed out that "in addition, Wangfujing is a typical state-owned enterprise, and its business style tends to be steady and steady. Hengda is a private enterprise with strong executive power. It also advocates the scale and speed of development. How to better integrate two different corporate cultures in the process of cooperation requires a running in period."