Or Wang Jianlin lived freely! Wanda took over the operation of Jianye's commercial projects, and Hu Baosen became the treasurer

Two "post-50s" real estate tycoons came together.

Image source: Visual China

Recently, Hu Baosen's Jianye Group signed a strategic cooperation agreement with Wang Jianlin's Wanda Group, in which Jianye Real Estate handed over all its commercial projects to Zhuhai Wanda Commercial Management Group Co., Ltd. (hereinafter referred to as "Wanda Commercial Management") in an overall operation and management mode, which is fully responsible for the business of investment, external leasing, operation and property management of related commercial projects.

Jianye Real Estate said that through the introduction of professional commercial project operators through cooperation, the efficiency and income level of asset operation of commercial real estate projects will be improved, and at the same time, it will play a financial effect of open source, cost reduction and efficiency increase.

However, Jianye Real Estate did not disclose the details of the transaction such as the cooperation consideration, term and personnel allocation.

"Slimming down" in the year of establishment

Although Jianye Group, which has entered the year of its establishment this year, is almost concentrated in the development of Henan Province, its business is quite diversified, including real estate, intelligent manufacturing, property, science and technology, cultural tourism, commerce, hotels, agriculture, Junlinhui, football, finance, etc.

According to the information on the official website of Jianye Group, Jianye's commercial business includes four major product forms such as Triumph Plaza, Triumph Hui, Baicheng Tiandi and Commercial Blocks, providing systematic services such as planning, investment promotion, operation and property for 18 prefectures and cities in Henan Province, nearly 5 million square meters of community commerce, characteristic theme blocks and urban complexes.

Judging from the data of Jianye Real Estate's 2021 annual report, due to the addition of shopping malls and commercial building projects, the commercial sector has contributed good performance. In 2021, its property leasing income increased from approximately $138 million in 2020 to approximately $203 million, an increase of 46.4%.

Despite the fair profitability, Jianye Commercial was entrusted. This is jianye group's "slimming" move under the goal of "doing less, doing small, and doing a good job". At the beginning of this year, Jianye Group caused a public opinion storm due to the implementation of organizational structure adjustment, Hu Baosen said at the media earnest talk meeting held at the time that the adjustment was not a whim, but a conscious physical examination to ask for dividends from management, and the future should adhere to "less, small and good", that is, not to open up new tracks, no longer pursue scale growth, and make the enterprise better and better.

This is also the effort of Jianye Group to revitalize real estate. At the 2021 annual performance meeting held recently, Wang Jun, vice chairman of Jianye Group, revealed that Jianye is docking with some state-owned platform companies in the province to revitalize some real estate, including cultural tourism projects, and even sell part of the equity or even give up the controlling right.

It is reported that the revitalization of real estate is one of the preparations made by Jianye Real Estate to repay the US dollar debt of 500 million yuan due in August. Jianye Real Estate said that it plans to repay the US dollar debt with operating cash flow, and the main measures include accelerating dematerialization, improving operating cash flow, optimizing asset structure, revitalizing real estate, and carrying out capital market financing in a timely manner.

As of the end of 2021, the total value of Cash, Cash Equivalents and Restricted Bank Deposits of Jianye Real Estate was about RMB9.848 billion; at the same time, total interest-bearing liabilities fell by 29.9% to RMB21.94 billion, short-term interest-bearing liabilities fell by 55.7% to RMB6.76 billion, and the cash short-term debt ratio was 1.5 times.

Jianye Group said that compared with the sale of assets, the cooperation with Wanda Commercial Management in the right to operate has protected the rights and interests of shareholders, and is also a commitment to owners and customers; in the future, it will cooperate with more partners in key project equity cooperation, joint venture development and other forms of cooperation.

However, in the view of Bai Wenxi, chief economist of IPG China, this is because Wanda follows the asset-light model and will not buy heavy asset projects. "In addition, Jianye's commercial real estate is mostly residential, and there are certain difficulties in investment operation, which is not necessarily easy to sell."

Wang Jianlin returns as a "white warrior"

Compared with Jianye Group, which has recently been caught in the whirlpool of public opinion, the other party to the transaction, Wanda Commercial Management, has attracted more attention.

Five years ago, the richest man, Wang Jianlin, was still mired in the mire. This year, Wanda began to "slim down", selling a number of its hotels and cultural tourism projects to R&F and Sunac respectively, cashing out more than 60 billion yuan.

Wang Jianlin announced at the annual meeting of Wanda Group that in the future, real estate investment will be gradually reduced, and the number of heavy asset projects will be reduced to about 5 per year in the future, and in principle, after 2020, heavy assets will no longer be engaged, all of which will be light assets. In January 2018, Wang Jianlin promised to digest the real estate business within 1 to 2 years, and Dalian Wanda Commercial stopped real estate development and became a pure commercial management and operation enterprise.

Since February 2021, Wanda Group has further upgraded the "asset-light" strategy, no longer investing in and holding Wanda Plaza properties, and fully implementing the "asset-light" strategy, and Zhuhai Wanda Commercial Management has also come into being. Although Wanda Group's "de-real estate" strategy does not really shrink real estate investment, Dalian Wanda Commercial has transformed into an asset management platform for holding and managing commercial real estate in this wave of adjustment, and Zhuhai Wanda Commercial Management has become a commercial management platform responsible for the commercial operation of Wanda Plaza.

"Watching him rise from a tall building, watching him collapse" has always been a drama that spectators love to watch, but it is a disaster and a blessing, and there has always been no definite number. The changes in the external environment have put R&F and Sunac, which have taken over Wanda's heavy assets, into a deep dilemma, and Wanda, which is lightly loaded on the road, has more initiative in the current real estate cycle with its asset-light strategy.

At the same time, since Wanda Commercial was delisted from Hong Kong stocks in September 2016 and unsuccessfully sought A-share listing, Wang Jianlin is planning to land in Hong Kong stocks again in the commercial sector. On March 24, 2021, Dalian Wanda Commercial Management Group announced its withdrawal from the A-share IPO team. The day before, Zhuhai Wanda Commercial Management was formally established and cooperated with Zhuhai State-owned Assets Supervision and Administration Commission, dalian Wanda Commercial Management, Zhuhai Wanying and Yinchuan Wanda held 69.99%, 30% and 0.01% of the equity respectively.

Subsequently, Zhuhai Wanda Commercial Management began to enter the Hong Kong stock market plan. In the Pre-IPO financing, Zhuhai Wanda Commercial Management received HK$48.6 billion in financing and was optimistic about PAG (Pacific Alliance Investment Group), Country Garden, Tencent, Ant Financial and so on.

The prospectus revealed that the asset-light model of Zhuhai Wanda Commercial Management includes the entrusted management model and the leasing operation model. As of June 2021, all projects under management from Wanda Group are entrusted management models, while leasing operation models from third-party projects account for a relatively large proportion.

It is worth noting that its leasing model is different from the traditional leasing operation model of the industry, mainly for the formation of income sharing, that is, sharing with the owner according to the net income of the project, rather than paying fixed rent. From this point of view, even if the commercial project is entrusted, Jianye cannot easily reap the profits.

Jianye Real Estate is not the first real estate company to seek cooperation with Wanda. On March 28, Xinyuan Group and Wanda Group held a strategic cooperation signing ceremony, and the two sides will carry out in-depth cooperation in commercial management, asset management, industrial real estate and other business fields.

Time has changed, when the industry has reshuffled again, peers are under financial pressure, and faltering forward, Wang Jianlin, who once broke his arm to survive, became a "white warrior".