During the period of deep adjustment of the industry, Gemdale Properties & Investment realized the withdrawal of real estate assets.
On the evening of July 31, Gemdale Properties & Investment announced that it would establish a private equity investment fund partnership (limited partnership) in Shenzhen Lingxin Industrial Park to acquire, hold and operate all the shares of the four industrial park projects in Shanghai that the group intends to sell, and the net return of the group is expected to be about 500 million yuan.
According to Gemdale Properties & Investment, the four industrial park projects are all mature operating assets, located in Songjiang, Jiading and Baoshan Districts of Shanghai, with a total leasable area of 439,000 square meters, and a perennial occupancy rate of more than 90%.
According to Gemdale Properties & Investment, each partnership partner has extensive experience in investing and/or operating industrial parks, and each member of the partnership can give full play to its strengths and develop its business by complementing each other's strengths and integrating resources.
It can be found that the insurance capital forces occupy the majority of the equity of the fund, and there are a number of state-owned assets behind the fund. For now, insurance is still the backbone of the real estate exit channel.
Set up a fund to acquire assets
According to the announcement, Gemdale Commercial Exchange signed a partnership agreement with all parties on July 31, 2024 to jointly establish Shenzhen Lingxin Industrial Park Private Equity Investment Fund Partnership (Limited Partnership), the principal business of which is to acquire, hold and operate the entire equity of the Gemdale Industrial Park project to be sold by the Group.
The Industry City Park Review learned that the acquisition was mainly for Gemdale Properties' four industrial park projects in Shanghai. The first is Gemdale Weixin Hongqiao Science and Technology Innovation Park, which is 100% owned by Gemdale Properties and Investment, and the project is located in the G60 Science and Technology Innovation Corridor, the Greater Hongqiao Hub Radiation Area, covering an area of about 48,000 square meters, with a total construction area of 65,000 square meters. As the first biomedical professional park of Gemdale Weixin, biomedical enterprises among the enterprises settled in Hongqiao Science and Technology Innovation Park account for more than 90% of the leased area.
The second is Gemdale Weixin Songjiang Intelligent Manufacturing Park, which is 50% owned by Gemdale Property and Investment, which is located in the state-level Shanghai Songjiang Economic and Technological Development Zone, covering an area of more than 70,000 square meters and a total construction area of about 110,000 square meters.
The third is Gemdale Weixin Jiading Intelligent Manufacturing Park, which is 42.50% owned by Gemdale Commercial and Investment, which is located in Shanghai Jiading International Automobile City, covering an area of about 80,000 square meters and a total construction area of more than 150,000 square meters.
The project is located in the core area of Shanghai Baoshan Industrial Park, covering an area of more than 70,000 square meters, with a total construction area of more than 110,000 square meters, and is a high-standard manufacturing industrial base integrating intelligent manufacturing, R&D and production, base innovation and commercial support.
Pursuant to the Partnership Agreement, Gemdale Properties & Investment holds the Gemdale Industrial Park Project and now intends to sell its entire equity interest in the Gemdale Industrial Park Project to the Partnership. Based on the transaction arrangement, Shanghai Jindiwei (a subsidiary of Gemdale Properties & Investment) is required to invest in the partnership as a partnership partner, with an investment amount capped at RMB300 million, accounting for 20% of the partnership's equity, and the amount of capital contribution payable will be funded by Gemdale's internal resources. After the completion of the disposal of the Gemdale Industrial Park project, it is estimated that Gemdale Properties & Investment will receive a net proceed of approximately RMB500 million (after deducting RMB300 million from the shareholding partnership).
Upon the formation of the partnership, Shanghai Jindiwei (or other subsidiaries designated by Gemdale Properties & Investment) and other partnership partners will hold 20% and 80% interests respectively. In terms of management structure, Shenzhen Capital Real Estate Fund Management serves as the general partner and executive partner, and the executive partner is responsible for, among other things, the operation, management, control and decision-making of the partnership; The remaining partnership partners (including Shanghai Jindiwei) will be limited partners.
It is understood that in this transaction, Gemdale Commercial and Investment will withdraw part of the equity of the industrial park, mainly because of the withdrawal of other shareholders, and the newly involved state-owned company requires control. After the completion of the transaction, the four industrial parks will continue to be managed by Gemdale Weixin, the operating brand of Gemdale Commercial and Investment Industrial Park.
The insurance unraveler behind it
The liquidators behind the fund are state-owned companies and insurance companies.
The investment size of the fund is capped at 1.5 billion yuan, and the deadline for capital contribution is September 30, 2029. The equity structure of the partnership shows that Nanjing Taibao Xinhui Zhiyuan invested 825 million yuan, accounting for 55% of the equity; Zhonghong Life Insurance invested 344.85 million yuan, accounting for 22.99% of the equity; Shanghai Jindiwei invested 300 million yuan to hold 20% equity; Red Earth Venture invested 30 million yuan and held 2% equity; As the general partner, Shenzhen Capital Real Estate Fund Management invested 150,000 yuan to hold 0.01% of the equity.
Among them, Shanghai Jindiwei is an indirect subsidiary of Gemdale Properties & Investment; Shenzhen Capital Real Estate Fund Management is controlled by Shenzhen Innovation Investment Group Co., Ltd., whose largest shareholder is Shenzhen State-owned Assets Supervision and Administration Commission, and Futian Investment Holding also holds shares; Red Earth Venture is wholly owned by Shenzhen Capital Group; Zhonghong Life Insurance is jointly owned by Manulife Life (International) Limited and Sinochem Group Finance Co., Ltd.
Nanjing CPIC Xinhui Zhiyuan, which holds the largest stake, is a private equity investment fund, and the fund manager is CPIC Private Equity Fund Management Co., Ltd., a subsidiary of China Pacific Insurance.
It can be found that insurance companies are still an important receiver for real estate withdrawal.
Based on the pursuit of stable long-term returns, the optimization of investment portfolios, and the need to adapt to asset-liability matching management, insurance companies are still an important channel for real estate exit.
Some analysts pointed out that in the context of the continuous decline in interest rates and the difficulty in finding high-quality assets in the market, insurance companies tend to invest funds in projects with stable returns and long durations, such as commercial office buildings, logistics real estate and industrial parks, so as to maintain and increase the value of assets.
On the other hand, the current real estate market is in a period of deep adjustment, the industry is speeding up the clearance, the asset disposal is increasing, and the price of real estate assets is also attractive, especially the real estate in the core areas of first- and second-tier cities, which may have strong appreciation space in the future.
For example, on January 1, 2024, New China Insurance announced that it would jointly set up a 10 billion yuan fund with CICC Capital to invest in the invested enterprises of the assets of the holding real estate projects; AIA Life acquired a 95% stake in Beijing CapitaLand · Star Trade Project for nearly RMB2.4 billion; Chinese Life System invested 686 million yuan to subscribe to China Resources Commercial REIT; China Life Group spent 3.1 billion yuan to acquire nearly half of the equity of Sino-Ocean Beijing INDIGO Phase II, etc.
In some cases, it can be found that most of the transactions are assets in the core areas of first-tier cities such as Beijing and Shanghai.
Gemdale Properties & Investment holds assets such as industrial parks, commercial offices, rental residences, and residential properties for sale. Among them, in terms of industrial parks, in 2016, a platform focusing on the development, construction, operation and management of industrial parks was established - Gemdale Weixin, focusing on life sciences, artificial intelligence, cultural creativity and other fields, and building an exquisite international industry platform with high standards.
At present, Gemdale Weixin has achieved a nationwide layout, stationed in core cities in East China, North China, Northeast China, Central China, South China and Western China, and entered the United States market. As of December 2023, it has entered 19 cities and developed and operated 42 industrial projects, with a management area of about 4.15 million square meters.
In the first half of the year, the cumulative contracted sales of Gemdale Commercial & Investment amounted to approximately RMB9.798 billion, with a total cumulative sales area of approximately 747,100 square metres. Recently, the company issued a profit alert for the first half of the year, and it is expected that the loss attributable to the company's holders in the first half of 2024 may be between about 2 billion yuan and 2.3 billion yuan due to the increase in impairment provisions for joint ventures and properties in development.