4 Billion 500 Million Acquisition Of Beijing East Second Ring Landmark Building, Hirotake'S Investment Portfolio Behind The Story

In February 28th, the north building project of the Beijing Sheng Sheng International Building (hereinafter referred to as "Sang Sheng North Building Project") was completed, and the 23 month real estate purchase case was finally settled.

China's old PE Hongyi investment has joined hands with internationally renowned real estate funds and won the project from Zhu Mengyi, a real estate tycoon. It is revealed that the total amount of the transaction is more than 4 billion yuan (US $575 million).

Hesheng International Building is located in the golden location of Chaoyangmen North Street, East Second Ring Road, Beijing. It is the landmark of East Second Ring Road, and is a scarce asset of Grade A office property in Beijing. It consists of North Tower, South Tower and concert hall. The acquisition target is the North Building of Hesheng International Building, with a total construction area of 75930 square meters, of which 56160 square meters on the ground and 19770 square meters underground, including 268 underground parking spaces and 30 ground parking spaces.

DTZ, who plays a role as a facilitating trader in the transaction, said that the transaction was suspended from the talks, the changes in key personnel, the listing of two domestic shares, divestiture, and the liquidation of historical problems. It can be said to be one of the most complex real estate acquisition projects in history, but it is also a classic case of a Sino foreign cooperative venture becoming a wholly foreign-owned enterprise and joint investment.

Hongyi investment in the official WeChat revealed that with the delivery of the project, Hongyi real estate finance and partners will work together to further implement the project value added plan, creating the scarce luxury and refined office products in the second ring road. After upgrading and upgrading, the project will display many highlights and become a landmark value added model of Beijing's core region.

It is "meat and potatoes" and "hard bone".

Over the past two years, many foreign institutions such as Blackstone, Kade and Ji Hui have considered investing in Chinese commercial real estate in the light of macro environmental judgement and global asset allocation.

When they pursue the investment targets, they often prefer the ideal type with these characteristics: the core position of the city, the initial net rent return of not less than 4.5%, the upgrading and upgrading space, the clean overseas holding structure, the clear debt and debt, the simple shareholders' background and the clear intention to sell.

And comprehensive evaluation, the north building project is a rare quality asset. It is located in the core location of the East Second Ring Road, and is only 600 meters away from Dongsishitiao metro line two. At present, the building is leased by the head office of CITIC Bank, and the rental yield is higher than the market average.

But at the same time, the project also faces many practical problems, such as different shareholders' backgrounds, single tenants, divestiture, cleaning up related companies' cash flow and so on. Many foreign funded institutions can only shrink from it.

"This project has been in the market for a long time, many agencies have been coveted for a long time, but no one can make the deal down. One transaction has even been signed by both sides, but it is only at the contract level, and ultimately it has not been done. " A person close to the deal told the twenty-first Century economic report.

The biggest difficulty of this transaction is that the transaction structure is too complicated. This is a rare real estate merger and acquisition transaction between Chinese and foreign cooperative enterprises transformed into WFOE.

Specifically, the North Building of the joint health company was originally a Sino foreign cooperative project. It faced three shareholders of different nature, namely, overseas listed companies, private enterprises and state-owned enterprises. Their share proportion was not consistent with the proportion of rights and interests distribution. Among them, the total number of foreign companies holding 98.9% stake in the project, corresponding to 90% of the rights and interests. Domestic companies hold 1.1% of the shares of the project, corresponding to 10% of the rights and interests.

For foreign investment institutions, the acquisition of shares abroad is what they are good at. But in the domestic share trading, it is facing difficulties. The holder of the 1.1% share of the joint venture North building project is Beijing Oriental cultural asset management company. The controlling shareholder behind it is the Dongcheng District state owned assets committee of Beijing. Due to the transfer of state-owned enterprises' equity, the listing process of the North exchange is required, and the whole process is full of uncertainty.

On the other hand, the north building project has been held by development companies for a long time, and the invocation of funds between affiliated companies is usually more flexible. Now, in order to be able to trade, it is necessary to clean up the current account of the affiliated companies, so as to make the accounts clear and conform to the bank loan requirements and the wind control requirements of fund investment. Because of the long history of the building, the whole financial law problem is much more complicated than the general project.

Why is the Hongyi investment union?

Hongyi investment is one of the main participants in the transaction. It is understood that Hirotake investment was established in 2003, the size of the management of funds 80 billion yuan, has PE, real estate finance, public offering funds, hedge funds, innovative investment and other businesses. Over the past five or six years, while continuing to develop PE business, Hirotake has quietly built a real estate financial business team, focusing on commercial property investment in the first tier cities and covering special assets and asset securitization.

At present, Hongyi real estate finance has withdrawn from a US dollar fund, with IRR reaching 28.5%. The two RMB fund under management is the earliest RMB blind pool real estate fund, plus the external cooperation fund led by Hong Yi. Hong Yi's real estate finance has already managed the first tier city commercial property assets exceeding 700 thousand square meters, and the total assets of the managed assets exceed 20 billion yuan.

In the field of commercial property investment, Hongyi real estate finance focuses on three major investment directions: the upgrading of old assets arising from old assets, the "upgrading of potential assets" driven by the new economy, and the "pressure assets discount purchase" brought by deleveraging.

The north building project of the joint life is obviously belonging to the direction of "old assets upgrading and transformation". As early as the end of 2017, Hirotake had invested with the project. Eventually, it got the project with a consortium of foreign institutions.

Who is Hongyi's foreign investment partner? In the official news, Hongyi only mentioned that the partner has long been committed to value-added investment in the Asia Pacific region. Earlier media reports said that the real estate investment group AEW and Hongyi investment cooperation acquired the property.

The people familiar with the matter told the economic report twenty-first Century that Hirotake had invested with this foreign capital institution in the past, and we all know the root of the matter. The trust relationship between the two sides is very valuable in the process of large project transactions.

At the same time, Hirotake investment and foreign investment institutions also play their respective advantages, and help to complete transactions successfully from both ends of the territory. Among them, the main value of foreign institutions lies in the capital side, which can provide stable foreign capital for the transaction. Hongyi investment also provides overseas funds for transactions, but its greater value lies in domestic equity trading, asset upgrading and investment promotion. Hongyi, a state-owned enterprise, has considerable experience in the transfer of state-owned shares, and can quickly coordinate resources and promote the completion of the listing of state assets.

"Hongyi has a better reputation in reforming state-owned enterprises, and it can get the corresponding trust and support in doing this. If it is a foreign fund, it may not be efficient. The people familiar with the matter told the economic report twenty-first Century.

Under the pressure of the epidemic, no transaction reduction is determined.

In addition, it is worth noting that the transaction that lasted for nearly two years is finally completed under the special background of the new crown pneumonia epidemic, and the difficulty of delivery is much greater than normal.

Specifically, the main participants in the transaction are distributed in several regions of Beijing, Guangzhou and Hongkong. All transfer arrangements and signature confirmation work need to be synchronized. At the same time, the transaction involves the coordination of loans between four or five overseas banks, all of which need to be completed on the same day in February 28th.

But because of the epidemic, most people can only work in their homes. Finally, the Hirotake team chose to deal with this matter quickly and flexibly. With the help of Hongkong's local team, lawyers' resources, partners' support and various communication tools, they finally completed the long distance delivery successfully. Meanwhile, Hongyi Beijing team also sent people to the project site to hand over the data with each other.

"Although the time is tight and the pressure is heavy, there is a period of time and even every day until late at night, but the final result is very good." This is gratified by the chief investment officer of Hongyi real estate finance department.

The epidemic not only brings pressure to the delivery itself, but also affects the activity of the office market. Analysis of the industry, in the short term, the office market has been hit. But for the quality office property in the first tier cities, the epidemic will not be affected in the medium to long term.

The completion of delivery means the beginning of project upgrading. It is understood that in the past 35 years, Hongyi real estate finance has set up inhouse operation team in Beijing, Shanghai and Shenzhen, and has handled more than 10 real estate projects transformation and investment operation. The accumulated experience will play a role in the north building project.

"In the project transaction process, we have been pushing forward the reconstruction design of the building. The design of the whole plan is very inspiring. We will adjust the function of the building and optimize the space. When it comes to the market, it will enhance its overall value. " Yan told the twenty-first Century economic report.

In terms of asset restructuring, Hirotake's investment may play the role of a driver. The foreign partner is equivalent to sitting on the copilot. Although they do not drive directly, their trust and support are also very important. If the whole transformation process is successful, the building will debut in the market in the year. At that time, CITIC Bank head office will relocate to China.

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