Shimao denies the sale of Shanghai Shimao Plaza for 10 billion yuan, but the pace of selling assets has not stopped
Author: Zheng Na
[ 截至2021年12月29日，世茂集团完成了处置34.21亿元内地资产，收取资金23.49亿元。 ]
The house is not easy to sell and financing is difficult to advance. Under the circumstance of tight liquidity, selling assets has become a key way for real estate companies to recover.
Recently, it was reported that Shimao Group (00813.HK), located in Shimao Plaza on Nanjing East Road in Shanghai, has initially determined that it will be taken over by Shanghai state-owned assets, and the transaction price exceeds 10 billion yuan.
Before the market on January 11, Shimao Group issued a clarification announcement saying that it had not entered into a preliminary agreement on the sale of Shanghai Shimao Plaza. However, it also said that it is in discussions with certain potential buyers to sell certain properties, and will consider selling some assets to reduce liabilities under suitable conditions.
According to public information, the main building of Shanghai Shimao Plaza is divided into two parts, including hotel and business. Among them, the commercial part underwent a comprehensive upgrade in 2017, and reopened in September 2018. In 2019 and 2020, its rental income was 230 million yuan and 208 million yuan, which is the commercial project with the highest rental income of Shimao Group during the same period; The hotel part was originally Shimao Royal Le Méridien Hotel, and was replaced by Conrad Hotel on January 1, 2022. From 2018 to 2020, due to renovations and the epidemic, revenue gradually decreased, from nearly 300 million yuan to more than 100 million yuan Yuan.
The project is considered one of the core assets of Shimao Group. An industry insider who is more familiar with Shanghai commercial real estate analyzed to reporters that if Shimao Plaza is sold as a whole at a price of over 10 billion yuan, it can be regarded as the market price, and there is no discount.
Another source revealed to reporters that the receiver of Shimao Plaza may be Shanghai Jiushi Group, a subsidiary of Shanghai State-owned Assets Supervision and Administration Commission. The reporter asked Shanghai Jiushi for confirmation, and the other party said that “the rumor has not been heard”.
However, according to Shimao Construction’s reply to the inquiry letter from the Shanghai Stock Exchange, it has set up a special asset management platform to promote the disposal of operating assets located in first- and second-tier core cities, speed up the recovery of funds, and reduce liabilities. As of December 29, 2021, Shimao Group has completed the disposal of 3.421 billion yuan of mainland assets and received 2.349 billion yuan of funds; it has completed the disposal of Hong Kong West Kowloon project assets and received 2.086 billion yuan of funds. In 2022, Shimao Group’s asset disposal efforts and scale will be further strengthened on this basis.
Coincidentally, Agile (03383.HK), which has already started asset disposal, has achieved a lot. On January 10, it disclosed to the public that since July 2021, it has successively sold a total of 14 non-core properties, including hotels (including hotels). 5 cases of land use, 2 cases of shopping malls, 3 cases of sales offices, 3 cases of residential commercial facilities and 1 case of apartments.
The total selling price of the above properties is about 2.8 billion yuan, of which Agile will receive about 1.149 billion yuan in 2021, and the remaining cash collection of about 1.651 billion yuan will be recovered in 2022; the net proceeds from the sale of the properties will be used for general operations funds.
China Aoyuan’s overseas assets are also under sale, with a property in Hong Kong sold in November 2021. It is reported that there are still about 4 to 5 overseas projects negotiating buyers, and the estimated transaction amount is about 3 billion yuan; while Yuzhou Group recently sold its Yuzhou, which is responsible for property management, at a total price of 1.06 billion yuan. The property was packaged and sold to China Resources Vientiane Life; Sunac’s cultural and tourism projects are also on the shelves.
For real estate companies that once chose to expand with high leverage, dealing with assets is the most direct and effective way to reduce liabilities. However, the size of the assets available for sale in the market is too large, making transactions much more difficult than in the past.
Some real estate industry insiders analyzed to the first financial reporter that at this stage, selling assets for self-rescue is facing a situation of price and no market, and private enterprises do not have excess cash flow for mergers and acquisitions, and there should be a period of time for state-owned assets to end.
“We’ve been talking about it all the time.” A person related to a real estate company in danger revealed to Yicai that the company has been working hard to sell assets and projects, but after two or three months, it still failed to make substantial progress.
Last Thursday, Guangdong-related units convened a meeting between some private enterprises at risk and state-owned central enterprises to try to broker some deals. A real estate company who attended the meeting said that it was just a meeting, and there was no mandatory and substantive result.
“Some assets have been mortgaged and financed before. To successfully complete the transaction, it is necessary to release the mortgage before the transaction is transferred. Funds are required to release the mortgage. Now it is unlikely that the transaction counterparty will pay the bridge funds first, so the transaction link will also exist. Difficulty.” An industry source revealed.
In addition, industry insiders in the non-performing asset disposal industry told reporters, “It is difficult to do non-performing assets, and those involving real estate have not been very good recently.”
In terms of policy, support for mergers and acquisitions between real estate companies has become increasingly clear. A few days ago, the central bank and the China Banking and Insurance Regulatory Commission jointly issued the “Notice on Doing a Good Job in M&A Financial Services for Risk Disposal Projects of Key Real Estate Enterprises”, encouraging banking financial institutions to carry out M&A loan business for real estate projects in a stable and orderly manner, focusing on supporting high-quality real estate enterprises in mergers and acquisitions. A quality project for a difficult large real estate company.
Guotai JunanXie Haoyu, an analyst in the real estate industry, pointed out that due to rising land prices, cooperative development was prevalent. Although central enterprises, state-owned enterprises, and private enterprises were independent entities, there was obvious cross-penetration at the project level. The phenomenon that projects are not owned by a single entity has brought mergers and acquisitions. The first problem with loans; at the same time, once a housing company under financial pressure loses its trust in a financial institution, the probability of returning to the real estate market in the future will become low. In the context, it is often required to be acquired at a premium rather than at a discount, which will bring about the second problem of M&A loans.
However, in the capital market, the expectation that real estate companies or their projects will be acquired and merged is getting higher and higher. “We hope that the central state-owned enterprises can lend a helping hand.” The person from the above-mentioned real estate company said, but it seems that it is not realistic to see results in the short term.
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Responsible editor: Chen Cheng
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